As the development effort in tyaga.org moves closer to the packaging stage, I would like to discuss a topic that is directly related to currency brand indexes: What type of currency diversity should an index represent and track?
There are many ways to design a currency index, but the approach advocated in satconomy is to represent and track the diversity of specialized market entities and their activities through the concept of independent currency brands. Each entity issues currency as unused revenue and expense budgets. In a transaction between two entities, the unused expense budget of the payor’s entity decreases by the same amount as the unused revenue budget of the recipient’s entity. Both entities publish and report depersonalized transaction information to promote traceability and auditability. This approach has the following advantages with regards to the design of a currency index:
Tracking by currency brands leads to diversity in both quantitative and meaningful terms. Each brand represents a specific entity that contributes and takes from the market. In contrast, other approaches emphasize the potential diversity in different currency designs, which would naturally have less diversity than the number of market entities and be of interest only to currency designers and not the general public.
The OCAUP currency life cycle in satconomy aligns closely with a market entity’s typical use of “money”: to budget for organizational goals, to make or receive payments and to evaluate market performance. In contrast, other approaches emphasize other aspects of currency design such as a common means for storing or expressing wealth. Although these design aspects are important, they are not emphasized in satconomy.
A currency index in satconomy represents the existing diversity of market entities that issue independent currency brands. The accounting systems and interoperability requirements are intended to be as simple as possible. In contrast, other approaches attempt to put a new layer of accounting configurability and/or currency type diversity on top of existing entity diversity.
In all of the currency systems, platforms or frameworks that I have surveyed, I have not observed any that emphasize the utmost importance of currency indexes. In contrast, the research, development and establishment of relevant, sustainable currency indexes is a unifying theme in satconomy. A dynamic, reliable and informative currency index is an essential component and goal in satconomy. A brand index is not simply an option – it is a mandatory feature that promotes public monitoring and self-regulation of market entities that issue currency.
In previous posts, I have discussed targeted noncooperation with specific market entities through the rejection of its currency brand. However, it is worth noting that satconomy also encourages informed acts of cooperation with reputable entities that issue independent currency brands. For example, individuals and corporations could support nonprofits not just by donating or granting funds to other organizations, but also by accepting an organization’s independently issued currency units in a market transaction.
Think about it. A church needs construction material for a shelter that it is trying to build – would a hardware/lumberyard company accept that church’s self-issued currency as payment for its products? How about a grocery store accepting a school district’s currency brand to support the school’s lunch program? The main requirement is for the lumberyard or grocery store to also issue their own currency as unused budgets, so that they could use the payer’s credits to cancel equivalent units of unmet revenue budgets. In this way, an entity accepts currency from another entity to cancel its self-determined obligation to the market, and not to have more ‘spendable money’ .
Looking deeper into this dynamics, it is easy to see the importance of knowing which entities to support or avoid. A lumberyard could instead accept stolen money for construction material used in building a mansion for a con artist (such as Bernie Madoff) — would it have been better if the lumberyard accepted a church’s currency to support a more worthwhile economic activity? With generic currencies that are not traceable to specific market entities, it is difficult to answer such questions. To make such determinations easier, tyaga.org is attempting to develop practical implementation of the concepts of independent currency brands, OCAUP accounting and auditable reporting.
A mock-up of an independent currency brand (ICB) index is available here. The demo ICB index has example market performance charts and news. I hope the demo gives more insight into one of the more popular post category in here, that of currency “brand evaluation.”
A market entity may be viewed as a species that performs a ‘niche’ role in an ecological system. So, for example, a farmer cooperative perfoms the role of food producer, while a clinic or hospital seeks to address the market’s health-related needs. Since each market entity has a particular niche or specialization, it is only reasonable to expect that none could become completely self-sufficient since, in this scenario, everyone is only able to concentrate on addressing a limited set of human, social or market need. In short, the general goal of a market entity is not self-sufficiency within itself and exclusive of others. Rather, an entity seeks to cultivate a self-sufficient market by contributing to the diversity of product choices in it and by influencing how resources are used for the production of ‘desirable’ products.
Of course, no one can summarily dictate what products are to be offered by market entities, or which products are desirable for whom. It is simply hoped that goods and services would naturally be produced by entities who see a need for them, and market participants would self-determine those products that they need and the choices that they prefer. It would seem that this expectation could lead to resource exploitation and unmet needs, and there might even be support for that viewpoint with the current state of market economies where, for example, one person could live in a 40 bedroom estate while hundreds are homeless on the streets.
However, the satconomy market framework is designed to offer active feedback to a market entity through the acceptance or rejection of its currency brand by other entities. This is different than current market situations where sellers blindly accept ‘generic’ currency regardless of how that money was earned. In satconomy, currency is traceable to a specific market entity and its activities. If market sellers are not willing to accept an entity’s currency brand due to its reputation, members of that entity are likely to run out of product choices, and without employees or members, that entity is destined to failure or extinction. Therefore, each and every entity in a satconomy framework is expected to actively regulate itself against public opinion in order to promote and maintain its market reputation. Please note that there is a similarity between this expected form of self-regulation and the current stock-price-oriented management of a publicly owned company.
In order for this feedback regulation in satconomy to work as expected, market participants must have reliable access to timely and accurate information that they could use to evaluate whether or not to accept someone’s currency brand. Even now, companies regularly update investors with financial results and ‘stewardship’ performance. Market entity information is also currently available as a constant ticker of stock symbols and price fluctuations. All that needs to happen in order to implement satconomy on a wider scale is to adapt existing information technology to serve the need for performing currency brand evaluation. I am not implying that it will be easy, only emphasizing that all of the ingredients are already available – we just need cooks in the kitchen. Or, perhaps more appropriate in the current analogy, new entity species simply need to evolve and take on a niche in this market ecology – its easier to establish a new currency brand before more competition arrives.
I have not posted here in awhile, but there is a good reason for that spell of blog inactivity. When I use a blog to discuss certain aspects of the satconomy framework, each post ends up having a very narrow focus and seem to become more and more disconnected from each other as the discussions get more detailed. I thought that a cohesive summary document would be useful for those who would like to see the bigger picture painted as a whole, and so I spent some time last month writing this document for that purpose. The summary document provides more relational structure to the concepts and principles that have been presented here under different categories.
I am also spending more time in developing implementation examples at the tyaga.org site, which now includes basic currency brand evaluation metrics here and online donation portal here. Please visit these links; I believe the online examples, in contrast with mere discussions, are able to illustrate the practice of satconomy more clearly.
Instead of posting another development update, this time I’d like to present the role and perspective of a credit recipient in a market transaction under a satconomy framework.
The credit recipient in a transaction could be a seller, a tax collector, a nonprofit receiving a donation, a grantee, or others in a similar role. I hope that it is clear by now, after going through earlier posts, that each and every entity in satconomy issues its own currency brand, and therefore does not to receive credits from other entities in order to have currency to spend. It may be asked, then, what would be the point in having an entity act as a credit recipient in a market transaction, when that entity could already issue credits to itself (and its members)?
Remember that an entity issues or creates currency as credit-debit pairs. An entity accrues debits at the same time that it accrues credits. The rationale for accepting credits in a market transaction is for an entity to use those credits to cancel its self-accrued debt to the market.
An entity, by exchanging its products – goods and/or services – for the payment (credits) of a market participant does not receive profits, investment returns, cash or any ‘wealth’ in return. In a satconomy transaction, an entity simply gets to fulfill its self-determined obligation to the market. The partial or total fulfillment of its obligation to the market is quantitatively symbolized by the partial or total cancellation of its self-accrued debits.
The next question might be, why should a market transactor be selective as to which credits or currency brand to accept? It might seem counter-intuitive for an entity to reject any opportunity to cancel its debits. The answer should be found in an entity’s goals or mission statement, where it declares its specialization and target audience, and in the reputation of an entity with regards to its ability to provide value to the market. A trustworthy entity accepts its role in helping cultivate a robust and open market, so it should cater its products to benefit those entities that the market perceives as valuable contributors. If an entity is deemed to support unpopular regimes or monopolistic entities or free riders, then even though it has the ability to cancel its debt (using the credits received from the unpopular entities), market participants could still choose to reject its currency. In satconomy, noncooperation goes beyond the refusal to buy a product from an ‘unfair’ entity and extends to the rejection of that entity’s currency brand.
When the basic principles of satconomy were being elucidated, trusteeship-based economy as promoted by M.K. Gandhi was neither followed nor considered in detail. However, as soon as the the concept of specialized unit entities became inseparable from the notion of independent currency brands, it became clear that satconomy was a special implementation of trusteeship economics.
Trusteeship is based on the management and use of one’s wealth and resources for the benefit of the community. It differs from communism or socialism in that the trustee is neither coercively deprived of private ownership nor specifically supervised by state authorities. On the other hand, trusteeship differs from capitalism in that the trustee is expected to benefit the ‘whole’ – community, market, society – and not merely to maximize ‘owner’ profits. In simplified terms, ownership is predicated on being a good trustee.
But what if the trustee was found to be untrustworthy? What if the trustee was not managing its resources for the benefit of the ‘whole’? Who should make that determination, who should take action, and what would be considered as appropriate action?
Satconomy provides answers to those questions through the use of entity-specific currency brands. The effectiveness of an entity as a trustee is symbolized by its currency brand, which its members earn for contributions made to the entity’s specialization and goals. If a market participant determines that the entity is not a responsible trustee, then that individual may choose to not work for that entity and/or reject that entity member’s currency in a transaction. Satconomy encourages market participants to not buy from irresponsible entities AND to reject any currency brand that are individually perceived as representing unsustainable market activities.
To specifically answer the questions posed earlier: In satconomy, each market participant is encouraged to make an independent and informed evaluation of an entity’s effectiveness as a trustee. A market participant does not have to evaluate all of the known market entities and currency brands, but rather, only those that he or she might be economically involved in through a work or trading relationship. If an entity is determined to be untrusworthy, then the appropriate action would be for the individual evaluator to noncooperate with the irresponsible trustee. Each satconomy participant is expected to actively help regulate the market through the acceptance or rejection of entity-specific currency brands.
From this expectation of a highly informed and involved market, the primary challenge in satconomy becomes how to offer universally accessible and up-to-date information about market entities. In meeting that challenge, satconomy would promote the open establishment of cumulative perceptions regarding a trustee’s performance.