Alternative Money For Creativity

topic posted Sat, April 1, 2006 - 9:33 PM by  John
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Via The Creative Generalist creativegeneralist.blogspot.com/20...tml an New York Times article by William C. Taylor about "Rite-Solutions, a software company that builds advanced — and highly classified — command-and-control systems for the Navy" which uses an interesting scheme of idea markets for generating new products for development www.nytimes.com/2006/03/26...26mgmt.html

One of my interests in alternative currencies is a mechanism for allowing people in developing countries to share what they've got. Many are so poor in terms of real money but have good educations and ideas. By making connections with ohters to share their talents alternative currencies, it seems to me, could encourage entrepreneurship and participation in the real money economy.

Rite-Solutions by creating an idea market within the company is an interesting model of how this can work.

"At Rite-Solutions, the architecture of participation is both businesslike and playful. Fifty-five stocks are listed on the company's internal market, which is called Mutual Fun. Each stock comes with a detailed description — called an expect-us, as opposed to a prospectus — and begins trading at a price of $10. Every employee gets $10,000 in "opinion money" to allocate among the offerings, and employees signal their enthusiasm by investing in a stock and, better yet, volunteering to work on the project. Volunteers share in the proceeds, in the form of real money, if the stock becomes a product or delivers savings."

The article quotes Tim O'Reilly:

"[C]reativity is no longer about which companies have the most visionary executives, but who has the most compelling "architecture of participation." That is, which companies make it easy, interesting and rewarding for a wide range of contributors to offer ideas, solve problems and improve products?"

There is a great "digital divide" between rich countries and poor countries. There maybe a ironic advantage for wired users in devloping countries in their use of the Internet in the sense that people there know that they must leverage what is a limited resource to make connections happen. At least they have ot work a little harder at it. Alternative currencies maybe a good way to do it. Any ideas?
posted by:
John
Pittsburgh
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  • Re: Alternative Money For Creativity

    Thu, April 6, 2006 - 11:29 PM
    It all sounds good--but I still haven't seen any alternative to $$ that workd. Please bring me up to speed if there is a way I want in. I am an artist, a thinker and truth is that is not agreeable with the capitolist routine. So tell me where is the alternative.
  • Re: Alternative Money For Creativity

    Sat, April 8, 2006 - 11:58 AM

    I think everyone's missing the point here.

    Obviously anything of value is exchangable for gold or dollars so describing this as an alternative form of money to meet some end is kinda silly.

    The thing about this thats COOL is that they are using market forces to dig up good ideas. The old style company has executives at the top coming up with and implementing the good ideas. Now they have EVERYONE submit their ideas and use a stock exchange to people to buy into the ideas that they like. The most "expensive" ideas are the best ones.

    So now rather than have 5 smart executives coming up with the ideas you have thousands of eyes and brains comming up with the ideas AND (this is the most important part) sifting out the good ones.

    It's a matter of a top down (pyramid) vs a bottom up (market) structure for getting things done.

    Bottom up systems rock and sould be used wherever we can find a place for them.
    • Re: Alternative Money For Creativity

      Sat, April 8, 2006 - 6:14 PM
      "There are things money can't buy."

      You make the point that money as value must be being either gold or dollars. I don't agree with that entirely, but I accept that most in this group hold your view as well. Why do super rich people continue to amass greater and great quantities of money, far beyond what they could possibly spend? One answer commonly given is that money is a way of keeping score. And I'm pleased that you see this company's scheme for using a form of money as score-keeper cool.

      Alternative currencies as are currently employed do not replace government issued currencies, rather exist along with other currencies. I fail to see why decscribing Rite-Solutions "Opinion Money" as an alternative currency is silly. I would be very interested to know why you think so? A benefit of discussing this a bit is that it might help get to some of the reasons why so we are talking past each other.

      I'll admit being dense and to often missing the point about a whole range of subjects. I also recognise that there are many in this tribe who know a lot about economics and that I don't. Nevertheless, I don't think I'm the only one who imagines alternative currencies not as replacement for government issued currencies, but rather a suppliment to them. Communities, schools, and businesses use script for various purposes. Perhaps there is a better name for these schemes than alternative currencies? I'd be happy to hear what people think about the matter and to get with the program so to speak.
      • Re: Alternative Money For Creativity

        Sun, April 9, 2006 - 7:16 PM

        Excellent points and questions:

        <<Why do super rich people continue to amass greater and great quantities of money, far beyond what they could possibly spend? >>

        Well I rub shoulders with these people a lot and have come dangerously close to being one of them on a few occasions (close enough that I've spent a lot of time wondering how I whould choose to live if I became super rich).

        Consider this: you've built a company, created the best product in the world, blew away all of your competition, and cashed out for hundreds of millions of dollars. Now what? Most people assume at this point that it's margaritas and palm trees until you're 100 years old. But the sad truth of the matter is is that margaritas and palm trees get really old after a few months. Seriously, retirement sucks. Ok, so you pick up a hobby, maybe its building rockets or perfecting a mesh network or building the better mouse trap. Damn, you just created a new kick ass company and you've got another 100 million coming down the pipe from a "hobby" idea.

        The reason that rich people keep making money is because, honestly, its an excellent way to push yourself to be faster smarter better. Its a great way to take a bunch of dead time and turn it into fun and adventure.

        AND if you understand economics it is very altruistic. Most people have a wrong headed idea of economics which assumes that there's a finite amount of wealth in the world and if one person is rich its at anothers expense. If I eat more pizza then you have to eat the box. This is wrong. Wealth is created. If I invent a better mousetrap and make millions, everyone is better (except the guy who owned the mouse trap company I put out of business). Every time someone makes money legally its because the provided some service that was not there before and they made the whole economy richer. To really get a good idea about how this works consider how the poor lived in the USA 200 years ago vs now. The difference is economic growth which was created by people making money by providing goods and serives that no one had before.

        A guy I know retired with hundreds of millions from his first company. His wife gave him grief because he spent too much time playing with his go-carts and told him to get back to work. So he started this company that makes these amazing little mesh network sensors that are really easy to program and use and can provide amazing amounts of real time data to anyone who needs to collect it. He's going to make hundreds of millions more AND he's help the world as a whole because now there's this amazing new product on the market that was not there before.

        So yeah, making money is a great way to kill time with tons of upsides and no downsides since you're MAKING the money, not stealing it.

        << I fail to see why decscribing Rite-Solutions "Opinion Money" as an alternative currency is silly.>>

        When I said "silly" I was refering to the idea of making an alternative currnecy to leverage the educations and ideas of the third world. If these people's educations and ideas have value they can sell them for normal currnecy. If their ideas have value and for some reason they cannot be sold for currency then there is no doubt some kind of government block preventing it and THAT problem needs to be addressed. Case and point, there's a LOT of people with PhD's in China that are worth hundreds of thousands of dollars per year to US companies but immigration law prevents them from being brough over here and utilized. Instead companies are having to build offices IN China in order to leverage their skills in country and the governmental borders on the markets screw up the supply and demand curves allowing these people to be hired for far less than they would be worth in an open market.

        As for the Rite-Solutions Option Money, you could argue that this is an Alternate Money but I don't think that's the interesting part about it. Just in the same way that monopoly money is an alternative money, the interesting part about it is the board game, not the fake money. In this case the interesting thing is the use of a Market to sieve out good ideas. Markets are really only recently being identified as a tool for leveraging the brains of a huge ground of unorganized people. The two most basic models are the pryamid and the market. Traditionally we always try and orgaize into prymids because the seem the most efficent, and markets only tend to crop up on accident since a real market can't really be designed. Case and point, there was an article a while back going around about how durning the invasion into Iraq there was a peroid of time where command and control lost contact with the forces on the ground. During this peroid of time the tanks had only basic radio communication with each other and had to adapt without anyone being in charge. During this peroid of time they had far higher kills and far fewer fatalities than when under top down control.
        • Re: Alternative Money For Creativity

          Mon, April 10, 2006 - 7:30 PM
          Thanks for your wonderful response Orion.

          I should read one thread at a time, but I don't. So I'm really happy that Vlad started a new thread related to this one. But I'll try to address my comments to your response.

          People are different and for whatever reason I'm the kind of person who wouldn't work if I had a hundred dollars in my pocket. I'm not recommending my folly to others, just saying.

          But I do recognise that money is very motivating and very much like how you put it: "The reason that rich people keep making money is because, honestly, its an excellent way to push yourself to be faster smarter better."

          You wrote:

          When I said "silly" I was referring to the idea of making an alternative currency to leverage the educations and ideas of the third world. If these people's educations and ideas have value they can sell them for normal currency. If their ideas have value and for some reason they cannot be sold for currency then there is no doubt some kind of government block preventing it and THAT problem needs to be addressed.

          It's very true that many governments in the developing world are mafia-states. The perverse incentives of corruption are a daunting problem. But not all obstacles to making money are strickly a government block. Many are the result of lacking integrated networks of infrastructure.

          For example a village pooled resources to trainnurses to operate a health clinic. But the clinic failed because there wasn't a way for the nurses to make money, there simply wasn't enough money within the community to support the nurses. Or another example: small farmers are often able to raise crops cost competively with larger mechanized farms, but lack market systems, like grain bins, and market information.

          To make money often what's needed are institutions and cooperative relationships which will serve as the infrastructure. As people build these cooperative arrangements they still have to live in a situation where there is very little money. Micro-credit arrangements are all the rage these days, and that's good. But these schemes often do not build the sorts of on the ground cooperative arrangements that can help communities leverage the real money put into them.

          Ideas of alternative currencies are all over the map as far as how they work, but can be very helpful in building arragnements within communities which make the infusion of money more valuable. One of the requirements for Habitat for Humanity houses to be built is the investment of the future owner in "sweat equity." Such "sweat equity" has real value, at least the house will not be built without it, but the value cannot be coverted directly into real money (that is until after the house is built and eventually sold).

          I agree that what's interesting about Rite-Solutions is using a market "to sieve out good ideas." The "opinion money" is important to making that work. But I suspect that most employees would yawn about it, and that it really wouldn't work, unless there was some real money to be made in the deal, and there is in this case. People have incentives to pick the winning ideas and to work on them because there is a money incentive eventually. The "opinion money" is a way of keeping track.

          People in the developing world are people like people everywhere who respond to incentives. In areas where there is little money, where people get by on a dollar or two a day, in order to make money they must address the infra-structure issues. That means they have to invest their skills and labor. Alternative currencies can act as a marker like the example of Rite-Soulution's "opinion money" of people's volunteer efforts, so that when a scheme begins generating real money those who hold the markers representing their unpaid efforts will receive certain benefits, even if the benefit is simply membership.

          I doubt my thinking on this is particularly strong. Nevertheless, even in Monopoly the Monopoly Money serves as an incentive and a marker of who wins and looses. In similar vein alternative money can help provide incentives for people in developing countries to build the sorts of insititutions which making real money requires. It's good enough to keep track of hours for some things. But another advantage of alternative currencies is allowing people to come up with their own plans; to enlist people behind their own ideas. When there is a local currency that is redeemable for various products and services it provides people in the community with some flexibilty to innovate new ideas. People who have earned and hold currency can then pay others for goods and services they need or want.

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