Heres the most current web-published writeup about the Economy App (edit: now renamed Makerfox) idea, with many changes compared to the original writeup.
It’s a repost from the Economy App profile page at the European Social Innovation Competition website, as that might disappear after the competition. (On 2013-04-12, we submitted the re-application for Economy App to that competition, containing significant improvements and more detail compared to the below writeup. We’ll shortly post that, too. )
“We don’t solve unemployment by improving how we compete for jobs. We solve it by creating jobs. And because of crisis and austerity, we have to do that without money. So let’s rediscover the wealth we have: hidden in our homes and abilities, there’s a lot we can provide that others need, and a lot that others can provide that we need. Such large-scale barter was impossible to organize until now, but just reach into your pocket and you’ll find a tool that is very good in connecting people, and has the computing power to provide cashless economy: a smartphone.”
Imagine we could solve most of unemployment by letting everybody download a working economy as an app that we can just start to use. We’re not yet there, but we’re working on it Here’s a typical scenario:
Imagine a group of 30+ economically deprived but tech literate and motivated people. For example, the young and unemployed in a self-governed social center in crisis-struck Spain. They might find the Economy App by themselves, or a visitor might tell them. A group of them meets one evening to start trying it out. So everybody downloads and installs this app, and people might help each other out with their old spare smartphones.
Now they celebrate the begin of their alternative economy, as everybody is literally pressing a big green “Start the Economy” button in their Economy App.
Connecting Offers and Wants, but Without Cash and Credit
The apps on all the interconnected smartphones immediately begin to work, and start to ask their users some questions each: about what they could offer in a local economy – and that can be anything from home-made cheese to carpooling, used furnitures, computer support and any other product and service that can reasonably be provided in a home or small business setting.
Users can also add more offers any time later, and the app plays its full strength by supporting this with special tools not available on regular computers: adding a product photo in five seconds with the internal camera, scanning books and other barcodes to get product descriptions from a product database. Offering 20 services and 200 items would be a good average per person, and should not take more than one afternoon. Note that offers can have one of a few simple types, for which additional features are provided: “for sale”, “for lending”, “for sharing”, “as a gift”, all either geolocalized or with shipping.
Then also, the app starts asking the users what they want. What their economic needs are. This is done by users registering their interest in the offers that others entered before.
Now, the magic happens: The software connects people to fulfill each others needs by each others offers. But not by direct barter, which is mostly impossible because of the “double coincidence of wants” problem, but by what we call “network barter”. One or two network barter deals will be generated per day, and in each one the software includes all people who can be fit in based on their current offers and wants.
The software keeps the value of products and services provided and accepted in balance for every person in this economic network: so compensation happens in kind and just in time, and no money ever needs to change hands. This economy is free from limitations of personal liquidity and creditworthiness, and thus can also work for the financially poor. And to some degree, all economies under austerity measures are financially poor: austerity made money a much scarcer good, and is a burden for money-based economies.
In total, this would provide compensated jobs for everybody involved – it can’t completely replace the formal money-based economy, but should generate enough income as a main or side job to allow again more decent living conditions.
A nice side effect that this app will produce is to make work “social” again: you’re no longer captive in your cubicle, knowing only your colleagues, but you will regularly interact economically with new people, mostly from your local area. Along the way, you can make new friends. And the software supports it by offering people potentially fitting new offers “like a dating site offers new matches”, and by celebrating deals and other business activity as a social experience, like exemplified by DaWanda for craftswork.
If the bottom line is that ordinary people can not only work their way out of widespread economic crisis, without money, but even have fun doing so, that’s more than a simple app could ever dream about …
Of course, this description, and the app itself, hides a lot of complexity. That’s good, as it makes this “New Deal” economy simple to deal with. But for those who want to know how it all works, here’s some technical background:
A serverside application to which all the smartphones connect to has the complex task to generate “multi-party deals” based on the economy members’ network of offers and wants. The basic idea follows the idea of Circular Multilateral Barter (CMB), but with two additions. First, the multi-party barter does not have to be circle shaped, but can be any kind of graph structure that fulfills this “break even” condition, including so-called “split and merge deals”. Second, these added barter types allow the system to operate completely without credits, also without P2P credits among friends, which can be problematic depending on culture. So in every barter deal that somebody gets involved in, the amount of good and services to provide and to get is always the same; that is, except for a low user-configurable “acceptable loss” that allows to get more deals by not requiring exact value matching.
Finding multi-party barter deals in this network structure of wants and offers is a challenging algorithmic problem. There’s still a lot room for optimization (and we welcome contributions from interested mathematicians), but it seems that we are able to produce a sufficient solution already. It involves backtracking, evolutionary algorithms and a solid amount of computing power.
While this app can work reasonably well in groups of 30 and larger, it is more useful the more people use it (so-called network effect). Spreading this app is one of the key challenges, if we really want to change the future of work in Europe to a brighter one. We’ll start small, prototype in local projects, but will also try achieve the viral spreading through creative and unconventional “marketing” and good storytelling.
Some more tools and techniques are needed in addition to CMB magic, but luckily, there are many existing initiatives which can be connected: community gardening projects for local production; a P2P reputation system; cooperative structures for founding and managing larger projects that emerge from a local economy.
The app will be aware of the legal regulations at each location, and informs the users accordingly. In Greece for example, all alternative economic activity is tax-exempt, as they realized that LETS local currencies etc. are valuable tools to ease an economic crisis. In other countries,the legal situation is more complex, but there is always a way to comply with tax regulations. In most cases, registering a small business and paying tax for your barter deals, documented with regular invoices, is a working option. If then you need cash money only to pay your taxes, it’s still a huge improvement over the current situation where you need cash money for near everything.
More information, and an invitation to an open project
This idea is under constant further development, which happens at the webspace of the friendly grassroots think and action tank Edgeryders, in group Economy App. I have been working on alternative economy systems for some years now, but I have to admit that I still constantly can find improvements for these ideas. And I welcome your feedback and contributions – this is an open project, and the app will be open source! For example, I’m seeking more input for cultural aware design of this Economy App idea (see this interview on my blog for a valuable example).
Image credits: Original image of smartphone image by flickr user fd, published as flickr image 4029847429 under a Creative Commons Attribution Non-Commercial 2.0 Licence. Modifications by me. Modified image re-licenced under CC-BY-NC 2.0.
Text licence: This text is licenced under a Creative Commons Attriution 3.0 Unported Licence. Or at your option, any later version.