If you are new to this blog, you may want to read the Start Here page first, as it gives an overview of what it is about.
The idea I am trying to communicate on this blog is multifaceted. It has many strands that weave together to make it work. The history of economics, communications and technology are all important. As is psychology, sociology, systems theory, ecology, the internet and many more topics. In order to make it understandable and fun to read I am going to these topics in a fairly linear manner, only weaving them together once the ground work has been laid, by which time an alpha release of the new economic protocol and a web site to demonstrate it will hopefully be ready.
I have to start somewhere and I have decided to travel back in time and begin as near to the beginning as I can with tribal economics. The rest of this post and several posts to come are going to be a look back through history at the invention of various communications technologies and how they effected society.
The earliest form of economic system that has been identified, and the form that is usually used by tribal societies, is known as a gift economy; specifically an egalitarian gift economy. In a gift economy, goods and services are given without any explicit agreement for future reward. I'll be exploring this form of economy in much more depth in the next few posts as the economic system I am developing, whilst not being a gift economy, borrows certain elements from it.
Looking at the earliest ways in which we exchange value, our earliest economic systems, is important. It is the closest we can get to our Environment of evolutionary adaptedness. This is the time in which our brains innate methods for exchanging of value evolved, and it provides clues as to what kind of economic system(s) we evolved to live in.
Following on from a gift economy, systems of barter were developed. Although there is no evidence of barter ever being the main system of exchange for a society, it led directly to a new invention known as commodity money. The problem with barter is that it depends on a coincidence of wants. If you don't both have something that the other needs then you can't swap. Commodity money solves this by making one commodity the main means of exchange. A common food, such as grain is thought to have been the original commodity, but this developed into more compact commodities such as rare shells or ivory. It was not until about 4000 BC that gold was first used as a commodity currency in Egypt and not until 650BC that gold coins were introduced.
Before getting too far ahead, lets step back again to approximately ten thousand years ago when there was a crucial communications technology development that enabled many changes in society such as the development of cities, monarchy/empire, and a stable centrally controlled economic system. Also, whilst commodity money already existed before this invention, for the first time it became a crucial aspect of social transactions. The invention of writing.
I call writing a one-to-few system of communication that is persistent over time and space. These are all important points, so I'll go through each in turn.
The ability for the powerful to commit their rules to writing, enabled them to exert their influence over a much wider area than previously. This is because a rule that is written down can be passed by a messenger to an underling in another location, extending the powerful persons ability to control the less powerful. This power also persisted over time for the same reason.
At the same time writing enabled the powerful to become more powerful due the nature of it being an expensive activity. It involved specialist training and materials production which limited how much information could be written and read and who could participate in those activities. This is why I call it a one-to-few communications technology. On the left hand side of the equation only a very few (simplified to one) could afford to learn to write, or have someone write for them. On the other, a few (more than on the left side) could afford to learn to read - but there are still vast masses of people who could do neither.
This imbalance led directly to the kinds of power structures that early civilisations had access to; monarchy, empire and dictatorship. Structures that are inherently ridged and concentrate power among very few elites. The rigidity is partly due to the expensive nature of writing, making it hard to change rules quickly.
Over thousands of years writing developed, changing from a hieroglyphic language; where thousands of small pictures were used to represent words, to one in which a small set of letters could be used to represent any word. Also over this time, the speed of the messenger increased. At first messengers would have travelled on foot, but developments such as horse ridding and shipping - expanded the range over which power could be exerted.
This trend continued until a little over a thousand years ago when the first new development happened; block printing. But it was not until 1436 that another major communications invention paved the way for enormous changes in society.
Block printing, for the first time, made it possible for the written word to be reproduced relatively cheaply, meaning that the 'few' in my equation above could be expanded to include a greater number. However, it was still very expensive to produce writing - each block of text had to be hand carved by a skilled artisan. It was not until 1436 when Johannes Gutenberg invented the movable type printing press that the left hand side of the equation was effected and it became cheaper to write material. This began a new era, which I call a few-to-many communications system.
As a side note, the movable type press was actually first developed in China in 1041 by Bi Sheng. however, due to the Chinese language still being based on thousands of hieroglyphics, it remained very expensive to produce writing, thus not having the effect on social structure that Guttenbergs invention did. The world might look very different today if this had not been the case.
The full effects of the printing press would not be felt for hundreds of years, but the balance of power started to change very quickly. The written word was still too expensive to be affordable by the masses, but it did become cheap enough for the merchant classes to be able to afford it. This is why I label the left hand side of the equation 'few' rather than the previous 'one'. Also, the ability to mass produce the written word opened up the possibility of the 'many' having access to it. It took hundreds of years for this to be fully realised, but this is where the process of teaching the majority of people to read and write began.
The first signs of the printing press changing social structure is evidenced in how they enabled the start of religious diversity through the publication of pamphlets. By 1517, the protestant reformation began, which itself soon began to splinter into many smaller factions.
Following hot on its heals, the scientific revolution began in 1543 as the 'few' began a serious and coordinated investigation of nature when Copernicus published 'On the Revolutions of the Heavenly Spheres' and Vesalius published 'On the Fabric of the Human body'.
A hundred years later, the English Civil war represents the peak of a major political shift, resulting - some time later - in a system where the many are represented by the few in a representative democracy.
A centrally controlled command economy - had essentially remained the dominant economic system for thousands of years, however a new system had slowly been building since Roman times - the free market, and for the first time it began to dominate. Firstly, with the level of literacy amongst the merchant classes taking a dramatic rise, a new form of exchange appeared, known as a bill of exchange; essentially a promissory note in return for goods. These bills of exchange became valuable in their own right; being exchanged with other suppliers for further goods, essentially passing the IOU on. Following on from this in the late 1600's, goldsmiths started exchanging promissory notes for gold. Essentially providing an IOU commodity exchange. This is a very important development because the paper note is an abstraction of an abstraction of exchange of value and this leads to many new ways in which money could be manipulated and lay the foundations of the modern economy.
The details of the modern economy are not relevant here. What is important is noticing how the advance in communications technology once again enabled a change in exchange of value and social structure. Also, that the shape of the social structure is heavily influenced by how power flows, due to the nature of the available communications technologies.
A second side note is necessary to point out that the Chinese also invented paper money earlier than the West, in about 1050. However, unlike the West, it was essentially just another form of commodity exchange and was very prone to forgery. The rulers were also tempted to print extra whenever they needed some, resulting in rampant inflation. In order to understand the relevance of the goldsmiths IOU's It is important to understand that the physical object of paper money, was not very important. What was important is what it represented – an abstraction of commodity exchange that could be manipulated in a whole new set of ways.
From the middle ages until twenty years ago, all other advances in communications technology were of two types. They either continued to increase the speed at which existing methods of communication could happen; such as shipping, trains, the telegraph, telephone, cars and aeroplanes. Or they were the same kind of few-to-many system as the printing press; such as radio and television.
Twenty years ago a new invention came along that has swept the world; the internet. A many-to-many communications system that is rapidly becoming an essential service that everyone is expected to have access to. Finland have recently made access to broadband a legal right.
This is a vastly different form of communications network from that which was made available by writing and the printing press. The nature of both sides of the equation being equal - anyone can both publish and consume information - is an enormous change. I predict that the inevitable result of this is sweeping change in almost every sphere of society.
It has only been twenty years. Things progress more quickly today but it took two hundred years for the full effects of the printing press to start to be felt and five hundred for them to reach maturity. Even if events progress at ten times the speed we are only just now at the start of real societal change. I suspect that given another twenty years, society will have begun to look very different.
The project I am working on is essentially a new system of exchanging value that grows out of this new communications network. It is somewhat comparable to what the goldsmiths did to money when they invented promissory notes. However the system I am developing, should it be successful, will effect every sphere of social life, from political and legal systems to education and social welfare. It provides a new way for exchanging value that does not rely on a singular metric of exchange, such as money, yet it can utilise all the advantages of a singular metric if they are desired.
What I am creating is not actually all that complicated. At its heart there are two ideas that once crossed will provide an ecology of values exchange that looks nothing like what we have today. I'll be exploring those two ideas in detail when I am close to a beta launch.
In many ways the transition that is coming is larger than the one that resulted from the development of the printing press. That transition was from a one-to-few network to few-to-many, which is a kind of scaling up. However the current transition to a many-to-many system results in a very different structure and has more in common with the one-to-one nature of tribal communities. This will be explored in depth after a brief foray into the difficulties of examining tribal life.
Edit note: This post has be significantly edited. I've scooped a lot of the content out and placed it in the Start Here page so that it does not become lost. The original post is available by using the revisions button below.