Introduction to ECSA White Paper PROGRAMMABLE ECONOMY
The crypto-political economy of the Economic Space Agency
Maybe the most difficult thing to understand about cryptoeconomy is that it has a potentiality to cause an irreversible change in the nature of economy itself: to make the economy and how it functions itself a design space.
The Economic Space Agency is discovering and articulating new distributed value forms – social, organizational, relational value forms that leverage our ability to act together – and a new value calculus, i.e., modes of measurement embracing different ethical starting points, including aesthetic and qualitative evaluations of what is thought ‘valuable’. It is this relationality and sociality of value – the way we sense and move with one another and leverage the ability to act together – that the current capitalist economic grammar does not understand, and for the expression of which Economic Space Agency has created its cyber-social stack (see here).
To activate the ECSA stack, we have designed a new kind of collective financial instrument, the ECSA crypto-token, a wager of collective praxis that opens up agency into the new economic space. We call our offer “The Big Put” as it allows investors to buy the right to off-load their exposure to the capitalist calculation of value and gain exposure instead to the new value forms.
1.1 Capitalism is passé: The cultural-financial decline of the asset called capitalism
Economy is a network: a group of agents interacting according to certain understanding (protocol); understanding about the relations that make the network, its state and how this state changes. The notion of what is value/valuable is part of this understanding.
Capitalism has claimed the word ‘economy’ for its very limited definition of a such network, its functioning, the nature and role of its agents, their relations and rights, what is its state and how it changes. And it has claimed monetary value as the only value that it counts in the functioning of this network. Even further, its economic grammar cannot incorporate anything outside its definition of this network. Conceived in the interests of the rich and powerful, it is an economy of unpaid costs and unacknowledged benefits. Furthermore, it has been so successful in enforcing its line between what is valued and what is not in its definition of a network, that its capacity to secure the reproduction of the biosphere – human and environmental – is absent. It can’t value our future, it can’t value intellectual capital and networks, it can’t value the social – it can’t value the new forms of value. The effect, framed in financial language, is that being ‘long’ this definition actively ‘shorts’ the qualitative dimensions of our life.
Our key task is to reverse engineer this destructive process. We need a more expressive economic language to describe networks, their participants, their relations, their values, their stakes, risks, upsides, and how they are shared. This language must corresponds to the necessities and possibilities of the information age and digital composability. We need an economic grammar that is capable of valuing the biosphere, intangibles and social innovation; making them expressible, measurable and liquid. This grammar must express relations among intangible elements and render them material and real, but without reducing their information into one capitalist-defined measuring unit of profitability.
The Economic Space Agency is discovering and articulating new modes of expressing, measuring, exchanging and creating value – a new distributed forms and calculations of value – and giving people tools to explore and operate them. It is an invitation to risk and speculate together, to explore what we can mean by ‘value’ and the creation of new social outcomes. It means reorganization and reproduction of economic space itself.
Central here is that we are now in the era of the derivative and the digitization of finance: our key economic innovation is that we think about finance and risk differently from both the mainstream financial system and the rest of the cryptoworld.
With the derivative form, finance engages exposures to volatility as much as ownership of underlying ‘assets’, where what constitutes an ‘asset’ must itself be renegotiated, and where liquidity depends on the decomposability of assets into their risk-related attributes, not on the capacities of central banks. Risk, both social and financial, cannot be eradicated, but we can think about ways of ‘risking together’; not so that individual choices and decisions are subordinated to some collectivised determination, but so that the economic and social context in which individual decisions are executed is itself transparent and collective.
Digitization creates a coded layering of relations of co-existence, meaning, obligation, property, and futurity, along with a complex matrix for the scripting of actions contingent upon future events. It makes ECSA’s economic-organizational composition bounded only by our imagination.
We call our offer “The Big Put” as it accentuates the derivative and the digitized in enabling investors to buy the right to off-load their exposure to the capitalist calculation of value and gain exposure instead to the new value forms being generated within ECSA.
1.2 Outline of the white paper
The white paper is made up of 5 substantive sections.
Section 2 Crypto-Political Economy
ECSA’s vision is bold and different but at its core it is not complex. It does, however, require that we are prepared to challenge some core propositions of conventional orthodoxy in economics. Within ‘cryptoeconomics’, for all the innovation around cryptography, there has been insufficient (indeed very little) attention to rethinking the economic component. The consequence is the widespread implicit embrace of conservative (supposed) conventions about how markets work and what kind of incentives generate best social outcomes. ECSA is exploring how information networks empowered by cryptographically enabled distributed computation may open up new framings of what is economically possible. Economy itself as a design space. We can now build token systems that are not state money; data that are generated in distributed ledgers, not by states or large corporations; and protocols that are open source. Re-thinking markets via knowledge derivatives and lessons from gift economies with elaborate token mechanisms for the circulation of social affect (like status, honor, face) enable us to reimagine how, in a cryptoeconomy, we can think of markets and information as value as objects of design; not the product of some naturalised ‘spontaneous order’.
Section 3 The ECSA Economy
The objective of ECSA is not to just develop new techniques of valuation, but to do so in order to value new things. We believe that there is now the capacity to value the social. In a capitalist economy, where value is linked to profit and individualism, this agenda is widely admonished as impossible. How can we value care, culture and affect? We think cryptoeconomics can enable this task. It won’t be easy, but it is a challenge we are looking to engage. ECSA economy will enable us to engage a serious valuation of the ‘social’, and to develop socially useful ‘big data’ that are not exploitative of individuals. We think that that is where the future of value will be. We argue that, with transparent protocols and distributed ledgers, we can form a ‘data union’ rather than a ‘data market’. With these data we believe we can open the field for a serious and implementable discussion of how we can measure social contribution and social outcomes. These measures are both quantitative and qualitative and the challenge of ECSA protocols is to negotiate the way we appropriate the aesthetic and reconcile it with more standard measurement aggregates. But the joint focuses of measuring a social economy and risking together lifts the framework from a platform for decentralised transactions between agents to a conception of an emergent social whole, where the issues of creative priorities and of modes of measurement are openly debated and organized from the ground up.
It means we are embracing volatility and ambiguity of measurement, not trying to ‘bury’ or neutralise them in taxonomies and modes of measurement designed to embed a particular notion of social stability: that of the capitalist profit-takers. We rather frame finance and data in the language of ‘social derivatives’ where volatility and indeterminacy come to prominence as the issues that drive change in the new economic space. Accordingly, the experiences of shared volatility become both more granular and more politically generative because they are integral to the design of ECSA’s operative grammar.
Section 4 ECSA Two Token System
The governance of the ECSA economy lies within protocols that support tokens, and with the token market as the ultimate arbiter of good governance. ECSA economy has a two-level token: the ECSA token, reflecting ECSA-economy-as-a-whole, and a range of individual economic space tokens – one for each creative endeavour.
We believe this token system, enabled by the protocols designed by ECSA programmers, represents a major innovation in cryptoeconomics, striking a considered balance between distributed autonomy, the provision of liquidity within and between tokens, and wider accountability. Both the ECSA token and (after bootstrapping) the individual economic space tokens will be traded in markets, so the ultimate evaluation of the performance of individual economic spaces will be market participants’ decisions on what exposures to buy and sell.
At the hub of the token system of the ECSA economy is the ECSA unit of account. This unit is a weighted average of the range of economic space tokens operating within the ECSA economy. The unit of account is not itself a tradable token, but the synthetic composite of the multiple different token modes of measuring outputs. The unit of account is a programmed calculation of the quality and quantity movements that drive production in ECSA economy. The unit of account is intended to change as priorities change in how output
should be evaluated. This makes the unit of account itself a social and political statement – a governance tool – rather than just a numeraire.
Section 5 The Fundamental Value of ECSA tokens
Thinking of ECSA as a genetically modified economy gives some signals to the material value to the ECSA tokens. The ECSA token will be backed by the productive content of the ECSA economy. ECSA protocol will ensure that the number of tokens in circulation is held proportional to the value of output (both for each individual economic space and for ECSA economy in aggregate). We have developed ways to re-define and measure MV=PQ that are appropriate to the ECSA economy, to ensure this proportionality can be implemented. Fundamental value based in the value of output (based in the protocol) stands as a form of ‘stability’, but stability different from that offered by ‘stablecoins’. ECSA does not seek stability with reference to another monetary value (eg. the US dollar), but stability with reference to the real new value created by the ECSA economy. Stability is in the ECSA protocol. Whether the nominal market price of an ECSA token holds to that value is beyond our control – current price will respond to market expectations of the future. But we can guarantee that the token will have a production-based ‘fundamental’ value.
Section 6 The Big Put
We operate in relation with the capitalistic economic space. We are not a crypto-commune; nor are we seeing ourselves as a political organization – though we see ourselves as financial activists. We have a commitment to the democratization of financial tools by opening the protocol layer of money and other financial instruments.
In financial language, our ‘long’ position is that people will gravitate to the ECSA economy because it articulates their values – it allows them to express their values, i.e. to use economy as a medium of expression. For those who wish to participate, we are therefore offering what we call ‘The Big Put’’: investors and participants in ECSA are buying the right to off-load their exposure to capitalist calculation.
We can think of the Big Put as not just a spread between the different risk exposures of mainstream capital markets and ECSA, but also as a liquidity bridge between the two, embedded in the system of token design. Our wager is that people will be drawn to ECSA because it resonates with contemporary social concerns about what is valuable, and what should be valued. ECSA becomes a financial safe space of a new kind.
1.3 Design Principles of the ECSA economy / The new physics of economic space
The foundational principles on which the ECSA Economy is built are listed below. They will be elaborated as the white paper progresses. These principles also inform ECSA’s cyber-social stack. The stack will be explained in detail in the ECSA technical white paper (in preparation), but readers might also like to consult the stack for clarity of the organizational composition of ECSA.
1) We aspire to ‘risk together’, but in a measured way – in the sense of being both quantified and strategic. The long position may be risk taking, but the strategy itself needs to be low risk. This implies focussing on both the upside and downside of risk and the desire for individual choices within a ‘together’ strategy.
2) We have a preference for decentralized and optional over centralized and compulsory, but these must be weighted against our capacity to be transparent and accountable, to hedge, and to be prudent.
3) The balance between centralized and decentralized should adjust over time: as ECSA economic space develops, centralized processes should be decentralized as rapidly as is prudently credible.
4) We need a unit of account and funding model consistent with the principles of nurturing post-capitalist processes of value production and capture.
5) We need to support all within ECSA economic space to define and measure (accountably) their economic activities in ways most appropriate to their goals. Hence it is important to design an ECSA token system that helps to reveal, but not to judge, the diversity of agendas, contributions, and values. As far as possible it is the ‘outside’ capital market that judges, not ECSA token system itself. The capital market, via its buy/sell decisions is the place where the diverse performances within ECSA economic space get reduced to a single metric (ECSA token price).
6) We make a commitment to the capital market that we will i) provide open accounts (measurement descriptions) and ii) maintain a transparent relationship between the issuance of ECSA tokens (and tokens inside ECSA economic space) and the level of production within ECSA economic space. As the value of production, as measured in the capital market, will be volatile (token values vary for many short run reasons) ECSA Finance protocol will manage a token issuance system based on long term trends in market valuation.
7) Participation is always voluntary
- Any actor can “disown” its agent at any moment in time if it stops serving her. The only incentive to preserve it is the “rights” this agent has or has accrued over time. In that sense, the utilization of the agent is only optional.
- The agent in a particular “space” might be bound by the rules of the space, and necessarily follows the, but ultimately, that agent is just an optional interface to the “actor”. The actor cannot be forced into using it.
- One actor (i.e. a human or user “external” to the system), can have and control multiple agents in different “spaces”. (economic or otherwise, but all, computational)
- An Agent will have a set of “rights” that it will give it access to different resources and computational capacities (capabilities), in the case of an “economic space”, the “tokens” the economic agent has, is the ultimate “loss” it may have if the actor renounces its agent
- An agent may enter into any form of virtual relationship (economic or otherwise) with any other agent, without intermediation, so any attempt at controlling what forms of relationship this peer to peer protocol enables, is ultimately futile.
- Inversion of control: all relationship creations are mediated by offers. Offers are inherently voluntary.
- Non-corruptible protocol
- Every agent is bound to follow the protocol it is programmed unto it.
- The behaviour of an agent is limited by the computational bounds defined on its protocol.
9) Non-Repudiable, non-forgeable record
a. Actions and state changes result of following of the protocol and are non-forgeable and verifiable. Since they trace the evolution of the state, and the state cannot proceed without implicit acceptance of the previous state, and according to the protocol, the state of an agent, and that of its shared spaces, is non-repudiable.
10) Functional Equality
a. All actors in the system, have the same default capacities. Starting with Gravity, everyone has an Agent capable of programming any other Agent/Agency/Space that can be expressed within the Space language.
b. The overheads of running virtual institutions are minimal, making them accessible to any individual actor.
c. Everyone is an issuer of rights.
d. Since “tokens” are a subset of rights (giving access to any particular resource), central token issuers are unnecessary.
e. Through automatic offer matching and bridging (offer networks, network derivatives), any token may be “exchanged” with any other, providing different non-money intermediated means of liquidity.
11) As a consequence, it is not possible to turn ECSA protocols/virtual institutions into private property.