Stewardship Through Market Goggles

Can thinking about markets help design systems for stewardship?

The LOTE4 conference in Matera was centered on stewardship, but often the focus was drawn towards stewardship’s capitalist cousin, the ‘sharing economy’. Perhaps Zipcar founder Robin Chase (@rmchase) nudged us in that direction.

She anchored her session with a neat definition of the sharing economy as activity using ‘excess capacity’. In the hackneyed AirBnB example (apologies - I’ll be using this as well understood example all the way through), the excess capacity is people’s unused spare rooms, which AirBnB turns into socially beneficial resources – but there are Silicon Valley startups trying to do the same for everything from photography equipment to dog sitting. In the same session, she also introduced the notion of market failure in the sharing economy.

In this post I want to use this idea of the market to highlight the differences between stewardship and the sharing economy, and think about how Robin’s idea of market failure can help design tools for non-profit collaboration such as stewardship.

The language of markets and economies wasn’t warmly received at the conference, perhaps because it recalls financial catastrophe and spiraling inequality. More of the same, not part of the hunger for something new that was imminent and immanent in the caves of the unmonastery.

Brett Scott muses on connected issues in his book ‘Hacking the Future of Money’, asking readers to ‘put on finance goggles’ to take up ‘economic circuit bending’. This captures something important, an idea, like Robin’s, that you can use the tools of economics even if you want to achieve something that’s radically new.

I think of stewardship as a DIY bricolage of barter, altruism and tradition, perhaps with shades of a conventional business model or public funding in the mix too. It transcends public and private sectors.

It’s a response to a perception that the public sector is remote, unable to adapt to local conditions, missing the cohesive effect that comes from a community doing things for itself. A sense of an impending, epochal failure in the public sector was woven into the fabric of discussions at LOTE.

The sharing economy belongs with the ‘smart city’ - both terms do double service as marketing jargon that belie corporate interests, while also usefully denoting a real phenomena.

There is a strand of thought, discussed at LOTE, that connects the sharing economy with the increasingly precarious and unfair economic structure we currently endure. I can buy into the idea that the sharing economy is a consequence of a neo-liberal economic agenda, but not so much that it’s a cause – equality or job security wouldn’t be improved if AirBnB shut down tomorrow.

We also thought about the sharing economy ‘crowding out’ previously altruistic acts - offering a friend a bed for the night etc. As some who let my spare room a lot through AirBnB, I could never have afforded to do that altruistically. Robin suggested that the sheer number of transactions Zipcar sees mean there must be something more than just substitution going on.

Whatever your conclusions about the ethics of the sharing economy - and I realise the political debate has a lot of subtlety to it that I haven’t gone into - it’s interesting to think about the crossover with notions of stewardship.

That crossover is in taking fragmentary bits of excess capacity and making them socially useful. But if you look through ‘market goggles’, they are also radically different.

Failure in the market for spare rooms (sharing economy) happens if someone who wanted to let a room, and someone who would have like to stayed in that room, fail to find each other. It could also fail if two people who let out rooms could swap and both be happier - this is thinking about the sharing economy in terms of Pareto efficiency.

We can see how different stewardship is. Take the example of a library closing down. Market failure for stewardship happens if people in community have spare time they would like to use running the library, perhaps tailoring it to their local needs, but don’t realise that they could do so, or if a number of individuals realise separately, but never meet each other.

My work, looking at asset mapping of communities through social media, tries to solve some of this problem: generating information about what resources there are in the community, and who is interested in supporting them. Much of the information is out there, but dissipated across many weakly interconnected networks. The problem is to liberate it.

In the imaginary library we need to ensure fairness. Volunteers might start to feel it was unfair if someone used the library every day but never contributed. In this case they might ask them to help out. Perhaps we want to waive this rule for people who are too old to easily to volunteer, or perhaps someone wants to contribute by giving books instead of spare time.

One of the problems discussed a LOTE is that often stewardship projects are powered by one person who makes a heroic contribution and then burns out – another issue of fairness. To be sustainable, people who make large contributions need some kind of recompense to support themselves.

This conversation about who contributes and benefits could be very difficult to settle, but this give and take is exactly the problem that market type mechanisms are designed to solve.

In fact, it’s very similar to the problem that @matthiasMakerfox solves, by giving abstract, non-monetary value to goods and services and algorithmically solving the demand and supply problem. Maybe money is part of the mix, maybe it isn’t. For example, exchanging money for human organs is illegal in most countries, but economists still like to think about a market and how to make that market work as well as it can - and win Nobel prizes for doing so.

You could solve these market problems with vouchers or local currencies, but as AirBnB or Makerfox demonstrate, web platforms have a big part to play in reducing friction and making these markets more efficient. Stewardship is a fuzzy concept, and the many permutations of fairness norms and conceptions of value, time, money and goods mean that many implementations are possible.

In it’s most philosophical sense, this is using the information processing and sharing power of the web to solve Hayek’s knowledge problem without resorting (exclusively) to money.

Which brings us to what I felt was the most thoughtful objection to economic thinking - @patrick_andrews’s idea that assigning abstract numerical value, the value of clean air in dollars or a volunteer’s time in euros, is intrinsically immoral or amoral. Thinking through this ethical problem is clearly a part of the design process. This is not something (all) economists are oblivious to, with Edward and Robert Skidelsky making an interesting recent contribution with a book and LSE lecture considering the issue.

Whether a market analysis appeals or not, it may well be an effective way to communicate with policy makers, for whom market based thinking often comes naturally. When justifying public expenditure, quantifiable benefits are very powerful, even if we know that qualitative outcome is what matters.

I would prefer that letting spare rooms could have been solved in an open, not for profit way - but that hasn’t happened. Even so, the fact that AirBnB works so well means that people are using the excess capacity in housing better than they were before.

Platforms will surely evolve to increase the use of stewardship (perhaps by a different name), there are already lots of promising starts in the area. But, unlike AirBnB, these systems will have a more open and participatory ethos, since that ethos lies at the core of stewardship itself.

Moving beyond technology to consider the systemic issues of politics and ethics requires multiple perspectives, and ‘market goggles’ are an excellent tool for understanding systems of value exchange like stewardship.

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Money & Platforms

That was thought provoking. As I read it through, some points:

– the failure of to find stewardship collaborators, and the notion that some people take more than they give felt a bit related. Are these problems the result of the size of our communities? In some long ago time with many fewer people, I would recognize the level of work that was going in to keeping some asset alive and useful because I would know the people and see the work being done. It wouldn’t be socially acceptable for me to be always a taker and never a giver. And I personally probably wouldn’t want to be that way myself. Contributing to community assets would be a norm, I would know where my skills and needs matched the needs and I’d contribute, or face social penalties.

Now, in very crowded communities, the work required to maintain things isn’t transparent. I don’t know the DOers nor see their work (or lack thereof). I can lack empathy, insight, and guilt, as well as finding a person with whom to collaborate if I wanted to contribute.

So I agree. In our crowded civilization, we need platforms to help supply/demand/interest match up. And we also have to somehow make the role of community effort in stewardship more obvious and transparent. Somehow, either through signalling, social norms or guilt, we have to make giving time a normative thing. Maybe it would be useful to have wikipedia articles with an effort scale (n people and y hours to produce this article).

Sometime in the last year, I read something that made me appreciate one of money’s finest characteristics: it normalizes and incorporates an infinite array of value(s) in to one single number. Money (could) incorporate characteristics about hours contributed, or skill, or contribution based on age, or timeliness of addressing something, or – whatever/everything. We say we don’t want a money based economy or stewardship, yet we recognize that there are differences of contribution. This is why makerfox assigns a value to the goods being bartered.

Perhaps we need to separate unhappiness with value/wealth distribution and the concept of money. We all recognize that creating the Airbnb platform took time, hundreds of people in the HQ writing code, taking photos, marketing, dealing with government issues, insurance, talking calls, fixing problems. All of us would believe that the people doing those things should be reimbursed and fairly for their efforts. Where we have a problem lies mostly with the percent of the value given to the people who financed the project (and maybe with those founders who came up with the concept). How much is that worth?

These two points probably boil down to a desire for 1) fair compensation, 2) appropriate taxation. The trouble isn’t “money.”

WRT the rule-making for the platform, we would want to see that more stakeholders interests are taken in to account.

Final thought: there is a red flag for me whenever I hear someone (not in this post!) say that the government should pay for something yet also talks about moving away from a money economy. We can’t expect government to pay for things if they don’t have resources collected from some specific place. I know! Other people’s money! Tourists come to us, or us pillaging someplace else.


Super normal profits

I think the idea that community size increases the complexity of sharing effort is supported supported by this interesting post, pointing out that money doesn’t arise because barter is complicated, but instead because reciprocity is complicated. No one ever had a significant barter economy, they went straight from keeping accounts in their heads to money – just as you describe.

Couldn’t agree more about separating wealth distribution and the concept of money.

My issue with AirBnB is that the value of the company rests on it’s ability to use network effects to lock in the whole of the room sharing market, at which point it will be able to make big profits without fear of competition. Whenever I’ve seen VCs talk, they explain they want to invest in companies that will not face competition in the long run.

I could see a case that, just as governments enforce things like weights and measures and contract law so that markets can work properly, they ought to enforce an open standard around room availability that makes the spare room market function. The problem is that data standards are much more complicated than weights.

On meaningful “markets”

@lasindias posted a beautiful piece today, it’s in Spanish and its title reads something like “How going out and selling transforms a community” (maybe we can cross post it here, in English? I’m up for translating it, with a bit of supervision). True, it refers to a small community (family-like cooperative if I understand well), but understanding some basic values that come with the market in this case could really inform better communication exercises, which is where I agree with @jimmytidey:

  • selling can be a radical exercise of empathy as it makes us look through the eyes of others to understand the needs that they have
  • selling requires bravery to not doubt the value our community produces, and our own individual value
  • not selling and giving away to pressures to offer something for free can sometimes make things worse (eg perpetuate inequalities)
  • selling honestly, respectfully, with meaning is an exercise of personal achievement

(reading things like the above after acknowledging the uncomfortable market talk that many stewards abhor, simply because it’s not in our/their nature).

Great minds think alike!

I had the same idea, Noemi. Let’s just do it. Doing a first pass now.

That said, I am pretty sure @lasindias refers to markets in a proper sense, used to exchange private (i.e. excludable and rivalrous) goods and services, and not to “markets” or quasi-markets for stuff like environmental quality, continued good health, or even collective goods.

Translated here…

The translation is here

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Deconstructing “money”

As Robin pointed out, Makerfox uses monetary units for measuring value. When it comes to the fairness issues in the sharing / collaborative economies, “the trouble isn’t money”. Or markets, as basic ideas. However, the trouble is facilitated by aspects of how our money and market systems are designed. Let me elaborate by deconstructing our notion of money and how and why the different aspects are used or not used in Makerfox:

  • Unit of account. A universal unit of value, for time, skills etc.. Very useful for reducing the transaction costs in trade. And for that reason, we use this monetary function in Makerfox. It allows us to find and execute barter deals automatically. No other "true barter" platform (i.e. those without account keeping) does this, and I have yet to find out why :) See for example BarterQuest, NetCycler, openBarter.
  • Market price. Units of account can be used both subjectively (what is it worth to you) and objectively (what is it worth to the market). Market prices can be unethical, for example monopolist pricing. However, subjective pricing has its own problems (it allows gaming the system to profit from "naive" traders who bid high and sell own items for low prices). For that reason, we do not use it in Makerfox (yet).
  • Intrinsic value. Money as a medium of exchange obtains its value from being scarce. That is the same for gold-backed and fiat money, just that gold scarcity is more credible and less flexible usually.
  • Medium of exchange. Money is a resource that everybody wants, it is universally useful, the universal commodity currency. "Reified pure value", if you want. In Makerfox, we see this as the most problematic aspect of money. At first, it is very useful, as it enables trade cycles progressing step by step rather than at once as it has to happen in Makerfox. However, as money is always scarce, it also makes it flow to where the best use value per price is provided, that is, to "big business". In societies with oversupply capabilities, this naturally leads to underemployment and unemployment, and to the concentration of resources at "big business" actors. That can be counteracted by fair compensation and taxation as Robin points out, so money is not itself the problem. But our current design of money facilitates these fairness issues. Which is the reason why we don't use the medium of exchange monetary function in Makerfox and instead use bartering. In bartering, price is not the only decision criterion for a purchase. Rather, price and reciprocity. A barter deal only happens when everyone both earns and spends. In theory, this can fix economic exclusion / unemployment: in a highly efficient mass production society, unemployed craftspeople can still barter among themselves, even though they can't compete with the market prices of industrial production.
  • Store of value. Causes problems with inflation, deflation. Leads to the desire for lending money for interest, and thus easily to the concept of debt. Also induces collective trust problems, that either limit the size of the economy to a few hundred people (as in LETS currencies), or requires a trustable or powerful currency governor like a state or the exceptional coop (my only example: WIR currency). Not used in Makerfox to avoid the trust problems.
  • Debt. I would argue that the ethical issues of money do not come from simply using a quantified price, but by enabling market convertibility of certain items. Like kidneys: if a kidney exchange algorithm uses a numeraire to express recipient preferences ("bid pricing"), but kidneys can only be bartered against (donor) kidneys, there is no ethical issue.

    There is a similar case with debt: debt is a credit relationship that can be transferred to a different creditor without needing the consent of the debitor. That makes debt problematic and destructive, because it abstracts away from the original social, trust etc. relationship. Having the numeraire itself is not the problem. For this reason, there are credits in Makerfox (the value transfer function uses them), but they are always P2P credit, not debt, and also without any interest.

    A third major case that I see is charging for knowledge reproduction: it lowers total welfare if we do. Knowledge reproduction has zero marginal cost (on the Internet at least), so if we can fund for knowledge creation in a stewardship model, the total welfare is larger. That’s why on Makerfox, one cannot sell IP, but one can crowdfund open source / open content projects.

It became a bit lengthy. But I liked to sort my thoughts on the topic, haven’t summarized it like this ever before. Thanks for providing an opportunity in this discussion :slight_smile:

Explaining money

If a community is going to adopt a alternate system of value exchange, my feeling is they should be able to understand it, but ideally also contribute to the design process. That seems like the best way to sooth the ethical concerns.

Makerfox is a ready made solution, and obviously has a deep conceptual framework for its design choices, but there is still the issue of communicating those choices with a wider audience. When you unpick money as you have above it becomes really hard to get to grips with it.

I can imagine a board game that allows you to experiment with different kinds of monetary systems, so you can get a visceral grip of how they work. Just like the lesson you learn from Monopoly as a kid: the banker always wins.

I think this intersection of a communication design, economics and software could be really interesting.

Once heard of such a game once … ah here it is …

It’s called the “Trading Floor” game. A card game, designed by Sybille Saint Girons and Matthew Slater in 2012. (Matthew Slater is the brain behind the CommunityForge software for managing mutual credit currencies.) Their game is designed to make participants “feel” the difference between value exchange systems, as you intended.

And their “Round 1 Swapping variation” version can be modified to allow circular and even network bartering, though the latter will be a challenge for the brains :slight_smile: If it works though, it would be awesome for doing Makerfox presentations. Hmm, now you got me on an idea … I might have the first occasion where to use this. But where do I get 10 people to test it :smiley:

There might be something appropriate for a presentation in a market chocolates that people have different preferences for, I guess you’d have to choose one flavour or another item as the ‘money’.

Could be short and fun. You can eat the chocolates at the end.

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Nice! :slight_smile:

Where markets don’t dare tread

@jimmytidey, I like your style. smiley

As an economist, however apostate I may be, I would like to throw in a couple of road signs to help this thread steer its way around concepts like markets and its failures. It is important to recognize that not every institution that presides over exchanges is a market. Typically, a market entails three things:

  1. The existence of at least one of each buyers and sellers, who have agency – i.e. you can model them with game-theoretical tools. You cannot make a market all by yourself.
  2. The absence of violence or coercion. Payment of protection money to your local thug is not a market transaction.
  3. A price signal, that incorporates the information about the buyers' and sellers' preferences for the good in question. "Out of the box" barter lacks this; hence some Makerfox choices to reinstate one.

It has been noted time and again by economists (at least since William Lloyd’s 1833 article on overgrazing) that markets can have sub-optimal equilibria. This tends to happen when the collective good is at stake – environmental goods are exhibit A. The standard response of the economics profession to this is to invoke market failure: the reason why the market does not produce an efficient equilibrium is that there is some good being exchanged at zero price – for example clean air, or a 1% increase in lung cancer rates, or the survival of an animal species. Stick a price tag on that good (or those goods) and then the price signals will incorporate the whole correct information. This, in turn, will allow the participants in the market to make the correct decisions, and the market equilibrium will be Pareto efficient once more.

I have tentatively believed that, as I participated in the “green economy” movement in the 1980s. We busied ourselves with ecotaxes and ecosubsidies and environmental liabilities coupled with Superfund-style instruments. Three decades on – and despite massive academic and policy support (example: the World Bank’s Global Environmental Facility, a body so effective you have probably never heard of it), we have not much to show for those efforts. Conclusion: correcting for market failures does not work, let’s move on.

Before we do so, it might be worth pausing for a moment to wonder why. I don’t know why, but reading David Graeber left me with the suspicion that many institutions that organize exchanges are not markets not because they don’t meet my condition number 3 (the price signal does not carry complete and true information about all parties’ preferences), but because it does they do not meet my condition number 2 (the exchange is not free from violence/coercion). In the case of the global environment, it is hard not to see that the richest people and, to a lesser degree, the richest countries, seem to draw benefits from a situation that is globally disadvantageous.

So, I see stewardship as a way not to correct for market failures, but to sidestep them. Stewardship is a non-market way to go about producing and allocating things. It is non-market because it does not use the market decision-making algorithm: it makes decisions with heuristics, or rules of thumbs. To clarify:

  • Market operators make decisions applying an algorithm: they maximize their utility (or profit) function incorporating the price level into those functions.
  • Stewards make decisions on the basis of rules of thumb like "make sure what you do does not affect negatively the next seven generations of the tribe", or "our family shall have zero debt: if we don't have the cash, we can't afford it".

Are the decision making rules consistent with stewardship also economically efficient? No way. But that’s not the point: stewardship is about resilience and durability, not efficiency. The Glass-Steagall Act came under attack from investment banks during the Clinton era because it was inefficient; but inefficiency was a feature of Glass-Steagall, not a bug. Every time you become more efficient, you make yourself more vulnerable to Black Swan events. Nassim Taleb argues that standard economics does not understand risk, and treats all risks are predictable. If it stopped doing that, the whole standard economics edifice would fall down, and the goal of efficiency would have to be replaced by a black-swan-risk minimization one. I think he has a very serious point here.

I had to build a pretty long case here (apologies!) but this is why I think that yes, it makes tons of sense to think about markets when you design systems for stewardship, but mostly to stay away from anything that looks like a market. If it needs stewardship, typically it means that markets do not produce it; and correcting for market failures is a fine idea that, to my knowledge, has never worked to solve any problem of substance.

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Hurray, we are not a market

A thoughtful piece, making it apparent you are on vacation :slight_smile: Late night “lesser” thoughts from me:

What I learned from it for the Makerfox platform is: it is not a market. Which is kind of a relief. It is not, because there is a coercive element: the Makerfox himself (algorithms that decide which of the alternatively possible deals to execute).

As you noted, it is futile to try correcting a market failure with more inclusive pricing. I guess it is futile because most of the price corrections need coercion to be implemented (like air pollution rights), and our political system with its entangled elites is incapable of deciding to do all this and to enforce all this.

However, since we can’t have perfect markets anyway, we could also try to fix the worst market failures with “good” transaction coercion. This is how it could be done in a large-scale network barter economy, resulting in a semi-planned economy. The price signal is still there, but only used to indicate subjective preferences and subjectively measured efforts. It is no longer the only decision parameter for market clearing, rather one of many. In the case of Makerfox, we have at least the following: (1) income = expenses for all users in a barter deal (obviously; the basic condition), (2) commission credit level of users, (3) percentage of commission payments from total turnover (max. 30%), (4) being frugal with “liquid items” like worktime and donations, as they are needed to plug holes in future deals, (5) minimizing percentage of cash money and added barter-value donation contributions in instant deals, because we want to replace the need for money as much as possible. We could incorporate more parameters to work against perceived market failures, such as: (6) favoring order alternatives that go to small businesses, (7) charging an additional commission for sales of certain environmentally damaging products, then forwarding it to a project that tidies up.

In a voluntary network economy plaform, we obviously can’t instantiate any rules we want, as people would leave and build their own platform. But there is a lot of space for bending the rules and transactions in a way that people do not consciously notice (since network barter transactions are unpredictable anyway).

Just like I argued above for monetary functions, I think market price is not “all bad” in a stewardship context: one can take some aspects and build a better system from it. It will not be a market, but offer some of the affordances of a market that “direct action” stewardship models lack and often need direly. Like indirect contributions, compensation mechanisms for contributions of detached third parties, compensatio mechanisms for “load balancing” between direct contributors etc…

There be dragons

Matt, be careful: that way lies madness. “One can take some aspects [of market price] and build a better system from it” is exactly what the environmental economists of the 1980s and 1990s thought. The risk is that people spend lots of time and energy fussing with shadow prices and the like, and nothing gets done meanwhile

And by the way, I would definitely call the Makerfox a market. Many real-world markets incorporate price signals as indicating “subjective preference”; in financial markets, you can place a bid of the kind “I am willing to buy 1000 IBM shares at price X or lower”. If no one is selling at that price, the transaction simply does not happen. And who controls? A software agent. Not so different from the Makerfox. Also, by coercion Graeber means “goons who will break your head” or worse, not technical constraints. For example, you could argue there is a “market for environmental quality” in the Niger Delta, with local people taking relatively well paid Shell jobs as compensation for living in a polluted environment; but you would be wrong, because of Ken Saro-Wiwa and others who dissented and were murdered. Exchange, definitely. Market, no.

Ok then let’s call it an intentionally imperfect market

I am warned … dragons. But I can’t help hacking things :slight_smile: Not trying the impossible like the environmental economists though. Just a market where price is not the only decision criterion, rather price and reciprocity (and some minor other things).

In the Graeber example, you have positive coercion (to enter into a transaction). In Makerfox, you have negative coercion (you don’t get the transaction even though you have the “money” and the other party is willing to sell). Btw, that’s also why there is no single “market price” in Makerfox: due to the requirement for making alternative orders, different people need to pay different amounts for the same commodity, as required to make things fit into barter trades. I see coercion wherever there are more factors deciding over transactions than simple presence of offer and demand and an agreed-on price. Sure, I see Graeber’s point as negative coercion is quite weak, it does not prevent people from leaving the market and joing a non-coerced one. However, they will only do so if the coercion costs them more than the opportunity costs to access or found the new market. That opens the space where the Makerfox can nudge people around.

This is not enough manoeuvring space to take over a lot of stewardship tasks (except if a state would make network barter obligatory, but would that be beneficial?). So we do not even try. In Makerfox, trading is for physical personal goods and services, but donating is for everything with collective benefits, including everything open source and digital. (Means, it will not be possible to sell software or any other artificially scarce goods on Makerfox, but one can make them into moneyless crowdfunding campaigns there.) If you can use something without pay, you also should pay for it without a transactional connection to use rights. It’s just that stewardship-by-donating schemes don’t work well if they first require chasing after a scarce resource (money). It could work much better if one can donate time, stuff etc… We’ll have to see.

Which brings me to a more important point that was probably implied but not expressed in this discussion: while I agree that the commons should be stewarded, it’s also true that all practical stewarding involves trading. Whenever handling money (or barter value) for a stewardship project, there is market interaction. Whether you accept donations, buy in professional services from an external consultant or rent an excavator to fill back in the Vake Park hole. Commons projects obviously profit from this.

Personal conclusion: Don’t trade the Commons. Trade to build the Commons.

Time is also scarce

All looks good. Minor point: stewardship-by-donating in time is not conceptually different from stewardship-by-donating in money. Both time and money are scarce resources, as you of all people can testify smiley.

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Communication Design

With all the comments, one thing that keeps coming through is that the conceptual framework of markets is very handy way of pulling these ideas apart - even if, like @alberto, you think the solution is in the opposite direction.

As @rmchase points out that markets are tarred with the same brush as other phenomena, such as inequality, which they are not synonymous with.

Perhaps that’s no surprise, given the comments with @matthias about how involuted things can become.

I keep on thinking that the communication design meta-problem might be a really interesting way to shift the conversation forward. Is there a game, visual tool, a physical computer, a prop that might help?

Specifically on Alberto’s points…

I think that you are right that you have to think beyond the normal model of market. In my example, a market where the price is zero for elderly people, and debts only have to be roughly paid back in the very long run. You might want to say this is no longer a market by definition, but I think you are still getting useful work out of the market concept – which is really what I’m driving at, I think it’s a very fair point that I may be stretching things a bit far.

This is a ‘semi-market’ designed so that a person using the horribly named ‘utility maximising’ algorithm will also be acting to satisfy other goals, such as the heuristics given.

I’m also not sure it matches exactly everyone’s idea of stewardship, but it can encompass many kinds of socially beneficial collective activity. For me, the fact that normal markets don’t produce things that need stewardship, doesn’t mean this loser definition can’t produce those goods.

When I thought of market failure in this loser concept of market, I wasn’t mainly thinking of externalities. I was thinking of imperfect information - people simply don’t know what can be supplied by this type of market. I can think of lots of occasions where market failure because of imperfect information has been improved - for example the warnings on cigarettes. I can also think of lots of times where the non-existence of a market has been improved by the introduction of a market, the classic example being the comparison between North and South Korea, or on a smaller scale water trading.

With Taleb’s thoughts on fragility, I guess you might think the natural ‘wiggle room’ afforded by the semi-market might offer a hedge against a black swan, but really I’m not sure his ideas apply to small local markets? The international finance system might be driven to become a tightly-coupled, complex disaster zone by efficiency, but is the same true of trying to efficiently allocate time slots for the town hall meeting room?

I have the Graeber book sitting on my self - hopefully will get to it soon. This is probably a conversation for another day, but I think the idea of coercion is very weird, since I can’t imagine a truly uncoerced person. I’m not sure what to make of that though.

Spanner in the engine

Of course, Jimmy, you could “hedge” by introducing limitations and qualifications. And people do: for example, my country, Italy, disposes entirely of market pricing in health care services, replacing the price vector with a national health service. Of course, this automatically means you get market failure. The old geezer next door gets his umpteenth CAT, that he does not really need and is just for his peace of mind) way before a sixteen-year old with a worrying symptom, simply because he has plenty of time to master the (non-market) system of queues and reservations. In a market system, the geezer would probably be willing to pay a lower price than the youngster, and the latter would get served sooner. But at the system level, this simple, common sense argument for a market for health care services produces dysfunctions all over the place: the number are in, and we know now that national health services are more cost-effective than market-based systems. And I am not even going into fairness issues. As a British person, you might want to consider rail service privatization as another story that was propelled by market failure considerations.

So: why bother using markets if you need to break them to protect yourself against the worst of the consequences? Some markets work really really well – for example, the markets for professional services. I say: use them when they work, don’t use them at all when they don’t. But I recommend you do not try to hack them - they have this nasty habit of outsmarting us and biting us in the ass.

When is a market not a market?

I imagine a spectrum. On one end you have AirBnB, super efficient, scales massively, and makes use of an under utilised resource, but is motivated by the incentive of monopoly profits, and is ethically ambiguous.

On the other of that spectrum, we have the purely altruistic notion of just giving stuff away, facilitates such an exchange. In this case, we cannot question the motivation - it’s a beautiful scheme - but we can see that it’s going to be hard to fund and sustain. I’m not sure I can think of anything like this at scale.

The middle ground is a system that keeps a rough account of exchanges, so that people can agree some fairness norm is being observed. This will facilitate the pooling of effort to achieve common goals. Whether this is strictly a market or not is a matter of definition - and separate to the question of whether such a system is a good idea or not.

For me, the word market has no ethical connotations, for others it seems it does, so perhaps a better word can be found. But I do feel that systems which dogmatically reject any notation of reciprocal exchange are defying a kind of economic gravity, and will only work in very limited situations.

@alberto I think your argument that markets are binary, either perfect and socially beneficial or dysfunctional and beyond redemption, is a bit extreme. Firstly, no markets are strictly perfect, yet in many circumstances they seem to work well. Secondly, the specific case of the ‘failure’ of the project to internalise environmental externalities does not generalise. I’m not talking about internalising negative externalities, or systems that face the same political backdrop as that project, or any scenario related to national provision of healthcare . Really, I think all large scale economic problems including multinationals and governments are a different question, and all attempts to correct markets could be ruined by politics, but the same can be said of any innovation or policy.

As a point of interest, many people think that Singapore does a good job of using a modified market, in this case in health care, to provide a highly functional system, but I think whether you believe that is irrelevant to whether small-scale local almost-markets to coordinate activity can work.

Rail in the UK is a wonderful example. People hated it when it was publicly owned, they hate now it’s privately owned. I don’t think there is any rule of thumb answer for what to do with a natural monopoly.