Transactions are the Problem
The cultural economy is a complex system of value exchange. Many of the knowledge and creative workers who participate in the cultural economy exchange not only money, but time, ideas, creative products, materials, and goods in a multitude of forms. As yet, there seems to be no consistent and convenient container for holding the value of these transactions while they are being negotiated, while they take place, and after they are complete. Contracts offer a powerful container for transactions, but can be difficult to use and to understand, especially for those who have invested their learning time in developing their cultural creative skills instead of their business skills. Finally, the mediums typically used to communicate the details of transactions are not transparent, and therefore derive no benefit from the disinterested attention of third parties.
Transactions are Intellectual Property
Because all transactions describe the movement of value, and value is an abstract concept, all transactions are also a form of intellectual property in their own right. How can the value of the transaction itself be increased for the benefit of the participants in ways that go beyond the valuewithinthe transaction? In other words, if transactions are buckets for moving value, how can the use of the bucket create value for the users?
Principles for Effective Transactions
For transactions to be successful in moving value and in creating new value, they must be:
- Fair: The end value on either side of the transaction is exactly the expected end value, on both sides, no more, no less.
- Transparent: Others—third parties—can see the transaction occurring before, during, and after it happens.
- Defined: The transaction has a boundary that is understood by both its parties and its observers. In other words, everything that is to be included in the transaction is pristinely separated from everything that is to be excluded.
- Protected: The transaction’s boundary cannot be crossed or interfered with by external parties, forces, planned events, etc.
- Externally mediated: All transaction details are stored outside the brains of the parties to the transaction, so they can be present during its negotiation and execution, and so that other ‘disinterested’ parties can provide feedback and suggestions for improvement.
When Transactions Fail
When these characteristics do not apply to transactions, they are likely to fail. Failure can take many forms and have many consequences:
- Parties become enemies to one another because expecations were not clear.
- Monies, goods, or other value-commitments are not exchanged according to the agreement for the transaction, because that agreement was poorly defined.
- Participants in the transaction might not know if it was good for them or improved their life situation.
Why Transparency Helps Transactions
Many of these failures can be avoided if disinterested third parties can pay attention to the transaction before, during, and after it takes place, and involve themslelves if they notice something going wrong. Open source software development works according to this principle—because many minds are paying attention to the software code, and can change it when they choose to, the overall quality of the software increases over time. This pattern can be applied to transactions as well—Ebay ranks sellers by providing buyers with a feedback tool. The aggregate of the feedback record of each transaction creates the seller’s reputation. This makes it easier for future buyers to choose a seller.
Contracts Are Unwieldy Transactional Tools
Legal contracts are typically written in complex language that prevents simple, everyday use. A simple equipment lease transaction can take four or five pages of language to describe in contractual form. More than 90% of the words in the agreement are not actually aboutthe transaction—they are aboutwhat happens if the transaction fails.
The Creative Commons (http://www.creativecommons.org) avoids this by making each of its intellectual property licenses in a ‘human readable’ form as well as in the full ‘legal code’, so it’s easy for users to understand what they’re agreeing to do, yet still includes the full power of an enforceable legal document. The legalese is separated from the everyday language.
The standard order form is often used as a container for value transactions. An order form might simply list items or actions to be taken, who will take them, who will benefit from them, when they will be done, and how much they cost. Of course, these forms say nothing aboutwhat happens when things go wrong because they have no place to store information aboutexceptions and unforeseen circumstances.
For example, a typical car repair order form has lots of small print around the line items describing the work to be done. These forms are the complexity of legal contracts blended with the simplicity of the order form, and often require separate intials in several places within the document.
Bucketworks: A Transparent Transactional Network
Becoming a member of Bucketworks means becoming a member of a simple, transparent micro-economy for collaborative transactions. These transactions might move many kinds of value around, yet the value and character of each transaction corresponds to the principles outlined above. Members have access to simple tools for creating transactions, executing them, and measuring the success of the transactions. Each transaction is transparent to other members, and therefore the entire network of members participates in the improvement of the quality of the network as a whole. It becomes a self-improving transactional network.
The Order Form
Each Bucketworks member will have their own ‘order form’, which other members will use to order goods, services, creativity, time, etc. from one another. We will offer members a personal skills assessment that will help them recognize and publish what they can contribute to other members.
The Contract Factory
Members will use a simple tool to create contracts that protect them from the consequences of failed transactons. Each contract will be publicly viewable and changeable by other members, preserving the principle of transparency.
The Public Debit Account
Bucketworks Membership Cards will be debit cards tied to an account with a local credit union. When an individual joins Bucketworks, it will create an account for the member and pre-seed it with some of the money from their signup fee. These cards will be special in that they will only allow transactions within the network of members. The account balance and transaction history will be public information for members. This gives members “real” money to play with, but keeps this money separate from their personal finances, thus reducing risk for members.
Asking For, And Getting, Work
Members will have access to an ask/offer system for creating transactions. I can post my skills as an event planner, and be hired by anyone to plan my event. I can post my need for graphic design, and designers can pick up the job. In all cases, the past transaction history and current account balance of each member are visible to all others, so there can be no obfuscation.
Executing a Transaction
Using debit cards, members will ‘swipe’ at the beginning and end of each transaction. The swipe action is the container for the agreement—not until all parties to the transaction have ‘swiped’ is the transaction considered real.
Every party to every transaction will be asked to rate that transaction for overall quality. These ratings will help the system improve its overall quality.
Everything below this point is abouthow to change Bucketworks so it supports this model.
New Membership Joining Process
Toolkit for Transactions
- Registrationin the member directory
- Skills audit
- Rates with details
- Timing (how long it takes for meto do something)
- Creating online order form
- Ordering School Factory transaction card— Bucketworks membership card = bank card with money in account pre-set up
- Creating feedback form
- Ask community bank to seed account with the $20 for the members.
- We control the relationship in terms of transactions.
- The card can only be used within the context of the network of members.
Tools we need
- Online directory of profiles which is searchable
- Reputation measurements with feedback a la Everything2, ebay, etc.
- Asks and offers directory
- Express process for setting up a bank account
- Get a card reader for every thing at Bucketworks
How can I pay?
- Pay with money — online, with your membership card
- Pay with time — online, with a promissory contract/order form
- Pay with materials or stuff — online, with a promissory contract/order form
Questions for everyone else
- Payroll— can we make the bucket accounts— do payroll as employee of self-owned company?
- Forming a corporation becomes an add-on
- Oliver Plunkett the accountant will help you do your taxes automatically at the end of the year
questions for banking partners
- How much will you seed the account with?
- Will you customize the card we give to members?
- Will you let us control the relationship— all we want is the card, and we want the statements to be personalized to our organization?
- Can we limit the transactions to the website/or in-community accounts? Only between accounts
- Will you throw in a card-reader for free for us?
- Customers can transfer money outside the network!
- Can we make the balance of an account transparent to the network?
How to roll out with members
- Betatest with smaller group
- Regular use members
- Do it with STAFF
- Invite rest of members to “Create Order Form Testing Session”