Category Archives: Implications

Social implications of civilitics

Implications, Philosophy

Cheating in a tokenized world

I recently came across an excellent lecture given by Dan Ariely at Google. His topic was behavioral economics and the ways in which human decisions are influenced by outside conditions. Of particular interest is a part of the discussion that deals with cheating behavior and the use of tokens. For proper context, I recommend watching the entire lecture but the truly relevant part begins at about 41:56 (see quotation below).

Authors@Google: Dan Ariely

According to Dan’s research, humans are less likely to cheat with money directly than they are to cheat with things once or twice removed from money. When students were given the opportunity to lie about an amount of earned tokens instead of money, the degree of cheating doubled.

In Dan’s own words:

For me this is perhaps the most worrisome experiment of all we got because we are moving to be an economy that is not about money; it is about things that are at least one step removed from money. Think about a CEO who is back-dating their stock options. It’s not money, it’s stocks; it’s not stock, it’s stock options. It’s not asking for more, it’s just changing the date a little. Could it be that somebody who would never imagine stealing $100.00 from a petty-cash box could nevertheless very easily back-date their stock options and still feel honest about their overall behavior. I think the answer is absolutely yes. Could it be that when people cheat on Paypal and other things that are a step removed from money (credit-cards) it is actually easier for them to be (to feel) honest and at the same time cheating.

So what happens when we take a step away from money but in the other direction. Rather than abstracting money to something else, like tokens or stocks, what if we test the human willingness to cheat with respect to something of immediate value rather than after it has already been abstracted into money?

Dan said that stealing is more common when we take a step away from money and his examples only are in the direction of more, rather than less, abstract forms of value. But how would the likelihood of cheating change if we went from money to something more immediately valuable? Would we experience an increase in cheating, just as when going beyond money, or would be find that cheating was actually less? Would we find that money is itself one step removed from real human value?

Dan is a scientist and clearly states that we need to do experiments to determine these sorts of behaviors. They can not be intuited. Someone needs to initiate a comparable experiment where actual value was one of the experimental controls. Could we imagine an experiment similar to the test-taking scenarios that Dan outlined, but in which payment was not in the form of money, but rather in something of intrinsic value to humans – candy perhaps? Is the Coke experiment already an answer to this question?

The real question here is whether the use of money as an abstraction of value has already created a tendency for humans to cheat – a tendency that might be repaired somewhat by a civilitic model in which people’s rewards are more closely tied to the more-real value (the contribution) of their actions.

Examples, Implications, Philosophy

Changing the GDP calculation?

According to an NPR story (Lady Gaga Writing A New Song Is Like A Factory Investing In A New Machine), the United States government is about to revamp the way gross domestic product (GDP) is calculated because economists are realizing that intangible investments contribute to the GDP and should be included in its overall calculation. In the Lady Gaga example, “the value of the time she spent working on new songs; working in the studio” is now worthy of being counted in the GDP. Investments in filming movies will also receive GDP status, as will investments in research and development.

Credit: MarkyBon

Credit: MarkyBon

So let’s get this straight: song-writing is a value-added activity and represents a contribution to the domestic product. While it may seem like a smoke-and-mirrors tactic to artificially inflate the GDP in order to make the economy look better (which could easily be the real motivation behind this change), the new calculation is a step in the right direction. It is an economic way to approximate heretofore unrecorded contributions to the public wealth. As such, it is a tiny bit closer to the implicit civilitic understanding that every value-added contribution is inherently beneficial to society and counts toward the wealth of a nation.

Since economics and civilitics are based in totally different principles, we must have a common measurement concept if we are going to compare them in a meaningful way. It would be just as inappropriate to discuss the overall ivi of an economic system as it would be to consider the GDP of a civilitic system. But let’s assume for a moment that GDP is a measure of the benefit to society (by the expenditure of effort and money) over the period of a year. Technically, this is not the case, since automobile accidents and disasters contribute to the GDP. But if we consider just the positive aspects of GDP, then the GDP might actually be an economic allegory for ivi. A national ivi (should we call it a GDI – gross domestic ivi?) would be a time-average positive contribution by a nation’s people, something vaguely similar to the GDP. Of course, ivi is a running average and is not bounded by any sort of annual calculation, but we could certainly measure it only once a year if we wanted.

An activity that is a freely-given contribution to the world and society is a civilitic activity. So song-writing – at least by reputable artists – is certainly an ivi-generating activity and the addition of song-writing to the GDP brings that calculation more parallel with an ivi calculation. The same is true for film-making or research and development. But what about other ivi activities that still will not be included in the GDP?

So far, the breadth of activities included by economists – even with the new rules – is grossly incomplete. For example, the GDP does not include domestic activity such as caring for children, cleaning house, or doing yardwork. These activities are also investments in the value of a nation and the well-being of its people. Child care only increases the GDP when it is being done for pay, usually by someone who is not the child’s parent, but doesn’t it still contribute to the wealth of a nation when it is being performed by the child’s parent? Is house-cleaning only important when it is done by a maid service? Is mowing a yard only important when compensation is paid to a landscaping service?

Economists need to explain where and why they draw a line between investing in a new song and investing in other value-improving aspects of our society. Furthermore, since they have now decided to add some of these activities into the GDP calculation, how are we to measure them or assign a GDP value? How much is GDP is that new Lady Gaga song worth while it’s being written and how does that compare with a song being written by my friend Peggy Lang?

In contrast, civilitics handles these questions intrinsically by allowing society to decide the value of all activities. If you mow a lawn, write a song, take care of children, or research a new technology, civilitics calls upon society to assign an ivi value. How much real value is added to society when a board chairperson spends the morning preparing for a shareholder meeting? How much value is added when a mother is available to help guide her child through a moral crisis? Ultimately, economics can only attempt to model calculations which are simple and natural for civilitics.

Implications, Philosophy

Adam Smith was wrong

Adam Smith is considered the father of modern [exchange] economic theory and his ideas about economics have influenced economists for hundreds of years. One of the basic tenets he is often credited with espousing is paraphrased in the Wikipedia article:

…when an individual pursues his self-interest, he indirectly promotes the good of society. Self-interested competition in the free market, he argued, would tend to benefit society as a whole by keeping prices low, while still building in an incentive for a wide variety of goods and services.

Some philosophers have taken this idea to the extreme, such as Ayn Rand in her book The Virtue of Selfishness. While it is clear that Smith was aware of far greater complexities in the exchange economic system than are captured in this abbreviated idea, they are less-often mentioned, or perhaps outright whitewashed, by an exchange economic establishment that would like to promulgate the simplistic notion that the market works best when it is unregulated and governed only by self-interest.

John Nash – Governing Dynamics

In his work on governing dynamics, for which he later received the Nobel Prize, John Nash addressed how an isolated strategy of self-interest does not necessarily lead to the best possible outcome. A fictional example of this principle was portrayed in the 2001 movie, A Beautiful Mind, as seen in the accompanying clip. In that simple account, John says of Adam Smith’s self-interest principle,

[Adam Smith’s theory is] incomplete… because the best result will come from everyone in the group doing what’s best for himself and the group.

This is significant in that it is exactly how civilitics differs from economics. Exchange economics gives each participant in the marketplace an opportunity to negotiate independently and maximize their own self-interest. As a result, self-interest, frequently manifested as greed, is the dominant principle. In contrast, civilitics shifts compensation into the public domain, creating a mutual dependence on both what is best for the individual and what is best for the group, just as Nash proposed.

This characteristic of self- and group-interest is intrinsic to civilitic systems because of the explicit lack of reciprocity in civilitic relationships. As a result, the reward system is negotiated upon the values of society instead of by self-interested greed, leaving little or no need for enforcement, regulation, or mandates to control civil behavior.

Implications, Philosophy

Economics as a dismal science

Thomas Carlyle referred to economics as a dismal science in his work, Occasional Discourse on the Negro Question, published in 1849 because he believed the new science of economics, with its market forces of supply and demand, would undermine the social advances that had been achieved through slavery. Consequently, he argued, any cultural shift from slavery to exchange economics was doomed to a dismal future.

Slavery

Slavery

Of course, time has shown that exchange economics ultimately brought about great industry and advances in science and technology. So we might conclude that Carlyle was mistaken and economists can wear the dismal badge with pride in the sense that it successfully replaced the ethically-corrupt institution of slavery while being at least as productive. In her TEDx presentation, Jodi Beggs remarked, “If that’s what we are going to consider dismal… Hey, sign me up!”

If we look at the production of value as we progressed from slavery to exchange economics, it might look something like the first two diagrams at the right. The first diagram characterizes slavery in the sense that an entity (large orange figure) exercises relatively complete power over one or more individuals in an unequal relationship. In this arrangement, the master exerts power over the slaves and wields coercive power over them, which is used to transfer value from the slaves to the master (yellow arrow). The slaves, who are powerless in the relationship are also the ones who provide most of the productive value in the relationship.

Exchange economics

Exchange economics

In an exchange economy, the power appears to be more equally shared between participants. While the power sharing may not be totally equal, we could characterize an economic relationship as one in which both parties wield some degree of power over the production and transfer of value. In a market, for example, the seller has control over the price of goods and the buyer has control over whether or not to buy those goods. Of course, this is the system most prevalent in the modern world, and the one that Carlyle predicted would be a dismal failure.

Unfortunately, the situation under exchange economics is often much closer to slavery than we are led to believe. Employers sometimes wield unequal power over their employees because the employees are dependent upon their jobs for survival. This form of economic slavery can be seen in sweat-shops in the developing third-world as well as in certain jobs within industrialized western nations. Indeed, it is remains a fairly dismal outcome of the economic model.

Normally the economic discussion stops there and does not consider anything else. After all, what could be more progressed than exchange economics? Slightly dismal though it may be, it is certainly better than the alternative: slavery.

Civilitics

Civilitics

At this point, I direct your attention to the third graphic. In this case, the graphic is much the same as the first (slavery) except that the arrow now points in the other direction. From that point alone, we might want to conclude one of two things: Either (A) it is very similar to slavery and just as bad since the power is unequally held, or (B) it might actually lie at the other end of the spectrum, being as much better than economics as economics is to slavery.

My intention is to show how civilitics, represented by the third diagram, is ethically more sound than exchange economics. In fact, I would like to recast exchange economics as the dismal science it has turned out to be.

Whereas civilitics depends on a similar disparity of power as slavery, it does so by inverting the power structure, making the power holder the one who transfers value to those without power in the relationship. The immediate question one might ask is, “What would prompt someone with power to voluntarily give away value to those who have no power?”

The answer to that question is inherent in the nature of a civilitic system. In simplest form, it is the giving away of value that entitles one to receive additional value from others as part of a slightly altered social contract. This is not so different from exchange economics in which one must make money in order to have the money to spend. Said differently, one must initially provide goods or services in order to eventually buy goods and services.

The significant difference is that civilitics is not based upon reciprocity (exchange) between individuals, but rather upon one’s participation to the public benefit as a whole. Because value is strictly given (as a gift), and the benefit to the self is decoupled from the giving relationship, the tone of every transaction is shifted from “What’s in it for me?” to “How can I help?” This is a subtle but very important difference.

Ultimately, economics has given us many great wonders. But it has also nearly about broken our planet. Without economics, the infrastructure that will build civilitics could never be built. So it’s a mixed blessing. Maybe dismal or maybe not. Either way, it is time to move forward, just as we once moved forward away from slavery.