The New Wealth – Reputation, the gift economy and the #AD2012giveaway

Economic Theory talks about a society being comprised of the “Base” and the “Superstructure” – The “base” comprises of what are the true “forces of production”, whereas the superstructure is everything else – a society’s culture, its instititutions, its political structure, rituals etc.

SImply put the base is “What you do”, and the superstructure is “how you do it”. Both inform the other.

Any economic activity occurs within a superstructure, and the two evolve. For example, currently our economic base is primarily “Industrial”, and the superstructure is “capitalist/democratic”. Some 200 years ago before that, the base was “agricultural” the superstructure was “imperial”.

Given the base and superstructure, there is also a subtle change in definition of “wealth”. While wealth will always remain “the control of factors of production”, those factors of production have evolved – in the agricultural economy it was “Land”, in the industrial economy it is “capital”.

Everytime one system evolves, we can say it goes through a phase transition. And, as with any phase change, this evolution is accompanied by a period of turbulence.

The Russian and French revolutions, Asia and africa’s struggle for independence from the imperial yoke – all of these can be seen as “turbulence” that accompanies the phase change of economic systems.

There’s no reason to believe that the base and superstructure has magically stopped evolving. As a matter of fact, i believe we are on the cusp of another phase change right now.

A few days ago, @anaggh announced the #AD2012giveaway – he looked at the stuff he had in his life which he did not use and decided to give it away. He made up some simple rules and used twitter to announce it. Some other folks decided to join in as well, and they gave away some stuff of tangible value –  stuff like mugs, ipad cases and iphone covers, leather wallets and so on.

A few months ago @boozeandshooze and others were responsible for #booksontoast – an initiative where they collected old books from the library of many folks on twitter, and sold them at rock bottom prices, using the earnings to buy comic books for streetchildren.

We may give these attempts names such as “crowdsourcing” or some other moniker, but for me there was a deeper insight. For me these are perhaps clarion calls of new phase change in economic systems.

We moved from an agricultural age to an industrial age. And now from an industrial age, we are moving to the “Informational age”. And as an economic system evolves, the base, the superstructure and the measures of wealth of that system evolve with it.

what could the potential evolutions be in the informational age?

Firstly the factor of production in the informational age is “Human Capital”, or what clay shirky calls “Cognitive surplus“.

How will this Human Capital be organised? Well, the above examples, and many other 2.0 examples give us a hint.

The Base could evolve from “industrial” to “mass personal” – More and more people will be able to mobilise the factors of production – crowdsourcing and crowdfunding are umbrella terms, they couch something more fundamental – how people are generating value in the informational age, how they are organising themselves is changing.

And the superstructure may well change as well – more and more economists are looking seriously at the post-internet resurgence of the “Gift economy” an economic superstructure that is completely different to the superstructures of the previous ages.

Wikipedia defines the gift economy (or gift culture) as a “mode of exchange where valuable goods and services are regularly given without any explicit agreement for immediate or future rewards (i.e. no formal quid pro quo exists)”

As opposed to the other economic systems, the concept of a “transaction”  is turned on its head – you give something of value (money/time/some resources) without expecting anything in return. And others do the same. And within the system… it magically works!

Both #booksontoast and #AD2012giveaway demonstrate a new economic structure. In a sense they can be seen as prototypes of the new “organisation” in the informational age, with the Base as Mass personal, the superstructure being “gift economy” oriented and the factor of production is “Cognitive surplus” – the desire of others to altruistically participate in your goals.

At the start of this long post, i had given wealth a definition – wealth is the ability to control the factors of production. If “cognitive surplus” is the factor of production of the informational age, then wealth is the ability to control that cognitive surplus.

in other words, the truly rich in the informational age are those who are able to get as many people as possible to contribute their cognitive surplus to their cause.

What is the measure of their wealth? Well, simply put, it is their “Reputation”. The more of a “reputation” you have the more people will listen to you, the more they will participate in your actions, the more trustworthy “information” you will have the ability to generate.

Both @annagh and @boozeandshooze have shown that they are “rich” in the informational age – they have enough of a reputation to mobilise factors of production.

Do you have the same ability? Does your brand? Your company?

If not, how are you going to compete in the new era?

PS. Most of the links on this post are from wikipedia, a shining example of all the concepts ive underlined about the Information age – The base is Mass personal, The superstructure is gift economy, the facor of production is cognitive surplus. And its wealth/reputation within the informational age? Well, you know the answer to that, right?

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About Tarun

Joker, smoker, midnight toker. Teacher, writer, general gadabout
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