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Reputation currency

From my column...

--====(C) Copyright 1995 Rishab Aiyer Ghosh. ALL RIGHTS RESERVED====--
Electric Dreams
Weekly column for The Asian Age by Rishab Aiyer Ghosh
#70, 21/August/1995: Implicit transactions need money you can give away

Information is often given away at no loss to its owners,
while recipients gain, because it can be duplicated. For
some purposes, it could be paid for in money that behaved
in the same way - adding to the recipient's wealth, while
not reducing that of the donor. This money would have to
be quite unusual; but so is the commodity being traded.

Buying and selling knowledge is full of implicit
transactions. One doesn't stop to write a cheque every
time one hears industry gossip, however useful, in the
corridor. More importantly, one doesn't even need to think
about doing so. So much of the knowledge traded in the
'real world' could only be done so informally. Trade is no
less valuable for this - the world runs on the chats with
senior colleagues, the friendly advice over lunch, the
learning and experience gained from working with a client.
Formalizing it all would kill it.

That's as far as we can get with knowledge outside the
distance-eliminating domain of cyberspace. The most
promising aspects of a world with fewer geographical
impediments in the flow of information include the
translation of the gossip in a corridor to an electronic
mailing-list, the ability to be advised by friends never
seen over a virtual lunch, or to chat with a senior
colleague across continents.

But the limitations of geography had advantages. People
now begin to wonder whether they're not being cheated,
when the corridor-mailing-list can have thousands of
people. The narrow confines of office buildings provide a
sense of community, and an assurance that the consumers of
the knowledge traded there are worthy of it, being likely
producers too. But restricting access to electronic
corridors will negate their advantages, of connecting more
minds across space.

The main option being considered these days is not just
overtly tied to economics - it must be, as that's what the
knowledge trade is about - but also tangled with hard
cash, with dollars. This is not only unnecessary, much of
the time, but also harmful.

With the safe assumption of secure international digital
cash transactions in the near future, the hard-currency
solution to the electronic corridor problem would be to
charge every consumer a small amount for everything - a
cent a word, say. This may work with traders in diversity,
the indexers of the world to whom you pay for anything you
need to find. It works rather less well for the traders in
consistency, to whom you would pay much more than a cent a
word for continuous, reliable content.

But for those who lurk in the electronic corridors of the
infosphere - and all the implicit cooperatives that form
between individual contributors to cyberspace's live,
people resources - the hard cash model is useless. Among
others, there is the question of who takes the money. The
Department of Corridors? The Treasurer of Electronic
Mailing Lists? It certainly wouldn't be fair to pay just
the individual author of the particular piece you read and
found useful, as it built upon the unpaid work of others.
After all, the informal nature of these gatherings of
minds is for a reason. They, or at least the active
participants, contribute not for cash but in return for
the contributions of others. They only take exception to
the one-way consumption by stray, if numerous, visitors.

The alternative to hard cash in these implicit
transactions in cyberspace is the equally implicit
currency of the real world. The currency that is used
almost solely in the trading of knowledge and which, like
knowledge, extracts no direct cost to the buyer at the
seller's gain. A currency that can be paid equally to
corridors full of industry gossip as to colleagues who
throng there. Indeed, a currency that is, and is traded
like, information itself: reputation.

Reputation may not, at first glance, resemble money. But
it is the implicit reward of good products, and their
producers. It certainly adds to - or subtracts from - the
worth of those who receive it. And it is the ultimate free
market currency. Traded as a commodity like other data,
reputation is based on, and influences in turn, the
average of 'prices' set by individual consumers - what
individuals think of a producer. Reputation encourages
improved production as much as, or more than, cash does -
at least in the informal knowledge trade. And reputation
will be a very important aspect of the knowledge economy,
with the increasing anomie of cyberspace as e-mail
replaces firm handshakes.

There are, of course, problems with transporting the
informal reputations outside cyberspace to reputation
systems within it. But work does continue on the necessary
technologies. This progresses at a slower pace than that
on automatic cent-a-word payment systems, because
developers don't realize the importance of informality in
the information age. This will have to change - the
knowledge economy is actually a people economy, and its
most common currency should reflect that.

Rishab Aiyer Ghosh ([email protected]) is the editor and publisher
of The Indian Techonomist.

--====(C) Copyright 1995 Rishab Aiyer Ghosh. ALL RIGHTS RESERVED====--
 This article may be redistributed in electronic form only, PROVIDED 
 UNDER ANY CIRCUMSTANCES be redistributed in any non-electronic form,
 or redistributed in any form for compensation of any kind, WITHOUT 
PRIOR WRITTEN PERMISSION from Rishab Aiyer Ghosh ([email protected])

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