Evolution of Freedom
Part II: TEAM SPORT - Chapter 20
Value System
The link between reputation and money is well established. If you have a great reputation in your particular trade, for example, you are more likely to have more clients and be able to charge more than those with average reputations. Conversely, if you have a bad or mediocre reputation, you are most likely forced to compete for clients by lowering your prices, incurring a clear financial penalty.
We now know that a) cooperative and altruistic behavior benefits the community, b) cooperative and altruistic behavior yields good reputations and that c) good reputations can be monetized. This means that d) we can use good reputations as a means to financially reward cooperative and altruistic behavior in our communities and e) that by doing so, we can make our communities thrive.
The problem is that reputation doesn’t always reflect the true nature of reality, and the information, even when it’s accurate, is not always available to all who need it. Many good and bad deeds simply go unregistered and aren’t reflected in a person’s or organization’s reputation. Reputation can be easily deceived by appearances: you could be living next to an ax murderer and not even know it.
Like our monetary system, our current reputation system is broken. You cannot even say that the system is broken since there is nothing systematic about how reputations are created. Instead of an actual system, our reputations rely on a completely arbitrary and informal way of collecting and storing these vital data. The bigger the gap between reputation and reality, the more likely we are to make costly errors in judgment and misallocate our precious energy/matter. We are paying dearly for the poor quality of information that reputations provide today.
To help us navigate the world and to allow us to make better decisions, we need to create a reputation system that can reliably record and disseminate this vital information. The purpose of the reputation system is to:
We now know that a) cooperative and altruistic behavior benefits the community, b) cooperative and altruistic behavior yields good reputations and that c) good reputations can be monetized. This means that d) we can use good reputations as a means to financially reward cooperative and altruistic behavior in our communities and e) that by doing so, we can make our communities thrive.
The problem is that reputation doesn’t always reflect the true nature of reality, and the information, even when it’s accurate, is not always available to all who need it. Many good and bad deeds simply go unregistered and aren’t reflected in a person’s or organization’s reputation. Reputation can be easily deceived by appearances: you could be living next to an ax murderer and not even know it.
Like our monetary system, our current reputation system is broken. You cannot even say that the system is broken since there is nothing systematic about how reputations are created. Instead of an actual system, our reputations rely on a completely arbitrary and informal way of collecting and storing these vital data. The bigger the gap between reputation and reality, the more likely we are to make costly errors in judgment and misallocate our precious energy/matter. We are paying dearly for the poor quality of information that reputations provide today.
To help us navigate the world and to allow us to make better decisions, we need to create a reputation system that can reliably record and disseminate this vital information. The purpose of the reputation system is to:
1) provide a more accurate picture of the world around us by projecting our collective values onto it so that we can make better decisions,
2) act as a credible counterweight to the powerful incentive that money provides and allow other values to be rewarded, and
3) provide us with a strong financial incentive to act unselfishly and in the interest of our community.
2) act as a credible counterweight to the powerful incentive that money provides and allow other values to be rewarded, and
3) provide us with a strong financial incentive to act unselfishly and in the interest of our community.
To bring our entire value system to life, we have to create a machine-readable reputation system that is able to accurately evaluate the world around us. What used to be oral gossip in hunter-gatherer groups would then become a global, collectively generated reputation system that is integrated into our markets. When such a reputation system is created, our marketplace is transformed into a pro-social marketplace that allows us to make better decisions and respond more intelligently to our environment.
Every time we subscribe to a cell, we receive an opportunity to evaluate it. Every time a cell subscribes to our work and compensates us with a workshare, we receive an opportunity to evaluate it. These evaluations create a cell’s internal and external reputation, which places it in a specific economic niche. The placement in this niche determines who will subscribe to it and how much they are willing to pay for its services.
Since reputations drive compensation and are an effective proxy for the public good, we have created a dynamic compensation model that incentivizes cells to behave in the public interest. This is a powerful form of market-based self-regulation, which actively incentivizes all participants to behave for the public good.
In a free market, supply and demand determine the price of a good or service. Reputation directly affects the demand and, thus, the price of goods and services. A good reputation increases demand while a bad reputation lowers it. This provides a great financial incentive to act for the common good and to avoid disruptive selfish behavior.
What would happen if we implemented such an incentive system? It would initially benefit the people who are already behaving with the community’s interest in mind. For the first time these people would have a way to systematically document their good deeds and be rewarded for their valuable contributions.
We can only assume that the more selfish individuals would initially avoid using such a system, since they wouldn’t want their behavior to go on record. If this was the case, the reputation system would initially act as a compact between those who do good, creating a practical way to avoid having to deal with takers, cheats and bullies.
While the systematic accumulation of reputation should be voluntary in principle, it is not difficult to imagine that once the system reaches critical mass, its use would become almost mandatory. People would simply refuse to do business with those who have not accumulated any kind of reputation, preferring to interact only with people who are willing to go on the record with everything they do in their public lives.
This is when our society could see a positive transformation on a massive scale. Once selfish behavior stops benefiting us, we have little choice but to change our behavior. For this to happen, it is paramount that a good reputation can only be accrued through genuine good deeds and not through manipulation.
Earlier, I postulated that our future cooperation depends on at least three types of information: one puts energy/matter in motion, a second tells us where energy/matter should be allocated and a third tells us how we should use that energy/matter once we have it. We identified the first type of information as the new type of money we are going to design. Now we can identify the second type of information as the pro-social marketplace that uses machine-readable reputations to provide evaluations. The third type of information is the votes used in a democratic decision-making process.
If we use the human body as an analogy, the money we create has the same function as the ATP energy in the body, while the pro-social marketplace has the function of the DNA. Where the information in the DNA tells the cell how to use the available energy/matter, the information contained in the pro-social marketplace has this same function in human economies. The pro-social marketplace thus acts like the social DNA that organizes and regulates human societies.
By systematically connecting the information our evaluations have created to the items sold in our marketplace, we can create a pro-social marketplace, where good reputations can be directly monetized. This replaces our defective incentive system with a better one, which creates a big change in how people behave. This is essential if we intend to maximize human well-being.
Every time we subscribe to a cell, we receive an opportunity to evaluate it. Every time a cell subscribes to our work and compensates us with a workshare, we receive an opportunity to evaluate it. These evaluations create a cell’s internal and external reputation, which places it in a specific economic niche. The placement in this niche determines who will subscribe to it and how much they are willing to pay for its services.
Since reputations drive compensation and are an effective proxy for the public good, we have created a dynamic compensation model that incentivizes cells to behave in the public interest. This is a powerful form of market-based self-regulation, which actively incentivizes all participants to behave for the public good.
In a free market, supply and demand determine the price of a good or service. Reputation directly affects the demand and, thus, the price of goods and services. A good reputation increases demand while a bad reputation lowers it. This provides a great financial incentive to act for the common good and to avoid disruptive selfish behavior.
What would happen if we implemented such an incentive system? It would initially benefit the people who are already behaving with the community’s interest in mind. For the first time these people would have a way to systematically document their good deeds and be rewarded for their valuable contributions.
We can only assume that the more selfish individuals would initially avoid using such a system, since they wouldn’t want their behavior to go on record. If this was the case, the reputation system would initially act as a compact between those who do good, creating a practical way to avoid having to deal with takers, cheats and bullies.
While the systematic accumulation of reputation should be voluntary in principle, it is not difficult to imagine that once the system reaches critical mass, its use would become almost mandatory. People would simply refuse to do business with those who have not accumulated any kind of reputation, preferring to interact only with people who are willing to go on the record with everything they do in their public lives.
This is when our society could see a positive transformation on a massive scale. Once selfish behavior stops benefiting us, we have little choice but to change our behavior. For this to happen, it is paramount that a good reputation can only be accrued through genuine good deeds and not through manipulation.
Earlier, I postulated that our future cooperation depends on at least three types of information: one puts energy/matter in motion, a second tells us where energy/matter should be allocated and a third tells us how we should use that energy/matter once we have it. We identified the first type of information as the new type of money we are going to design. Now we can identify the second type of information as the pro-social marketplace that uses machine-readable reputations to provide evaluations. The third type of information is the votes used in a democratic decision-making process.
If we use the human body as an analogy, the money we create has the same function as the ATP energy in the body, while the pro-social marketplace has the function of the DNA. Where the information in the DNA tells the cell how to use the available energy/matter, the information contained in the pro-social marketplace has this same function in human economies. The pro-social marketplace thus acts like the social DNA that organizes and regulates human societies.
By systematically connecting the information our evaluations have created to the items sold in our marketplace, we can create a pro-social marketplace, where good reputations can be directly monetized. This replaces our defective incentive system with a better one, which creates a big change in how people behave. This is essential if we intend to maximize human well-being.
