To seek the true value of the individual within a rapidly changing financial system, I will try to comment on the following: how might technologies such as blockchain impact economic policy in the near future?
What role will labor and the perception of human value in production continue to play in global fiscal and monetary policy? Which role does humanity take in a value-exchange system that increasingly does not require humans?
Furthermore, in this piece I only wish to express my own observations on some pathways to a world that embraces a new form of banking using blockchain and Distributed ledger Technology (DLT). Consider this a stream of consciousness exploring possible systems, rather than a piece attempting to convince you of their potentiality.
Establishing Bias
As a precursor, Plato and his republic would despise me. I am a son dependent on the wealth of his father, my skills derivative of a public education based first in achievement and culminated upon by complacency.
Currently, I simply exist in this world and ponder the workings of humanity and the systems it creates. I tell you these things because the bias it creates is imperative to understand if you wish to see a potential future of the global economy as I see it.
Such a future relies on each of us understanding how currency is impacted by the various forms of production seen around the world, and how we as laborers interact with the systems of production. The focus of this writing will be on new concepts of consensus labor, while also commenting on classical ideas towards the objectification and alienation of labor in digital and traditional economies.
Before I explain this potential future, I wish to further explore the idea of consensus — which is important to me surely , but may be even more important to you eventually; for you may base your ideology tomorrow on my writing today, and over time as we come to view the same concepts in the same way, we remove the various bias that would normally prevent us from truly interacting.
This affirmation could continue for each reader until we have all come to some sort of general agreement regarding my worldview in relation to that of yours and those around you. Once this ‘consensus’ in a network has been established, and is trusted by all actors within that network, incredible things can happen. So, as I write of labor of consensus I mean more: the act of coming to agreement around value, which should clarify things further on.
Now that we understand the basic definition of consensus, my personal relation to the global economy is something I wish to discuss in more detail. How you perceive my value is imperative to how others perceive yours, as we explored above. This is the idea of a value of consensus and is the precursor to a new layer of digital interaction which is fundamentally intriguing to me as a political scientist.
Essentially, if our value can be perceived by another to be inherently lower than their own value, while we simultaneously perceive that effect to be compounded in all economies, and the consequences split along geopolitical boundaries based on traditional definitions of labor and civil rights; we must then assume that all markets that currently exist under such perceptions must be inherently biased. They exist to abstract the worker from the value of their labor and to profit on that abstraction.
Biased markets are limited in their functionality as soon as monetary policy begins to blur the lines of class utility within the economy. We see this concept played out in social class revolutions, or between old and new wealth in economic epochal shifts, but does this phenomena translate to digital spaces as well?
These are the kinds of questions that should be explored in the design and development phase of these blockchain technologies, as we have the opportunity to study the impact they will have on the world as adoption increases.
It is my own personal theory that we are in fact exploring these concepts in real time through a sort of living experiment within economics, I’ll explain further down, but first:
Establishing Bias: Continued
What mechanisms exist to allow me — a dependent, a philosopher, a man in a machine of modern monetary policy that can live on subsidized education — access to loans and equity from the government to pursue my education, while another across the globe can struggle to maintain adequate health standards for their family while working nonstop to exist in a rigged labor economy without any financial assistance from their government?
Furthermore, how can we ever hope to interact as two extreme economic examples within the same global economy without abstracting the true value of either of our production efforts?
While yes, blockchain is a technology that brings us closer together as global citizens, we still do not share the same concept of value as producers in the global economy. Because, if we can exist in the same ecosystem and create the same valuable contributions in different forms, that does not automatically mean that we share the same potential value for the production at any given time.
This is due to costs of production for the labor, and the cost of access to technology and networks in some parts of the world, where near constant use of digital tools is limited or impossible.
External network constraints like taxes, wages, and local economic issues like weather and even politics all play a part in determining the value of labor within a traditional economy. By decreasing the value of labor, or increasing the costs to access to the centralization of production, the value of the labor is centralized to the owners of the means of production.
But why does the value of labor matter in terms of global interoperability? It allows markets access to greater liquidity. And why should it not be centralized? Because labor is abstracted and its value is taken by those who control access to the markets.
Cost of Production
As long as access to production technology is controlled by those who would enrich themselves by their use, the concept of digital labor will fall into the same socioeconomic pitfalls of the previous generations of humanity. We will be forced to reward labor disproportionately based on the infrastructure of the past.
Where the labor of the population is undervalued based on the scarcity of access to technology, and control of the means of production by a centralized few, economic progress for the populous is undermined.
Consensus towards the true value of the labor produced in these markets is impossible until the the production can be assessed organically. This must be accomplished without bias extracting value before production has even commenced.
In order to exist in an age where labor is considered equal in terms of potential value, we must embrace a new architecture that gives all the labor performed within it the ability to be valuable before the point of production.
Online engagement is a great example; for instance, I can read an article and pay for the author as I scroll through the content. I can stream a song by the byte and pay each artist individually.
The author does not have to wait for me to reach the end of their writing to extract the true value of their words. The musician does not need a label to extract the value of their art.
And neither should the reader expect to pay for a service they wont fully utilize the preservation of words on paper, or a listener pay for the production of a physical disk.
In this rewarded phase of pre-production, the author and artist can receive compensation in real time based on their labor. Not the result of their labor after its been abstracted by other means.
The value of the book lies in the words not the binding. So to does the value of the labor lie in the production not the result.
While, the reader is rewarded by receiving valuable content for a reasonable price, and the listener is rewarded by getting access to music on their devices without sacrificing storage.
None of the parties expect a full labor contract to be completed before either of them receive the value the inherently got from this perceived interaction.
How can I find value from a book without reading it? How might I know if I like a song without hearing it? It’s an organic value transaction that only needs to be tracked in consensus in order to be realized truly, without abstracted value deflation.
When I think of engaging in digital economies, I know my actions to be inherently valuable within that digital space, regardless of how much labor I’ve produced in the present. By existing in a digital space I create value.
Therefore, I should be able to realize the value from my engagement at any time as long as the actual labor is eventually performed. This is where my primary argument for ‘Consensus Labor’ resides:
Consensus Labor is the idea that a task or contract exists in a perpetual state of dynamic value as agreed upon by the consensus of free market which remains unobstructed by the sociopolitical bias in which the network participants independently reside. This labor’s value can be realized as production commences because the perpetual state of dynamic value can be adjusted at any time during production.
In light of this concept, I argue that there must be forms of my labor which are left unrealized in my current economic system. Where my value as a digital denizen is misrepresented by a restrictive economic process of evaluating the total domestic value of production without taking true labor into account.
In this abstraction, the value of the individual laborer is lost by being held to the combined value of all potential individuals laborers within any operational economy; they are awarded with cash connected to artificial monetary inflation that the laborers themselves cannot control.
This is why iPhones are made in China, and yet the factory workers who manufacture the product find it hard to afford an iPhone themselves.
The value of the product of their labor has been abstracted by the bias of their inherent national economic policy. The production of the phone, has more value for the centralized controllers of that production, then the phone has for the external economic market participant.
In this scenario the laborer becomes a commodity. Not the phone. The phone is the result of production, but it’s value pales in comparison to the value of the laborer. Which reveals the true transaction is in labor not the goods that labor produces.
If someone can transact within global markets without being affected by the bias of those markets the transaction has a higher value inherently as we’ve laid out. This is also reflected in the stability of economies affected by war and other domestic disruptions like natural disaster.
If the markets of that specific economy are taken offline, then new markets must be sourced before the gap in production ripples through the global economy. But it is not the raw goods that must be replaced, it is the raw labor.
Blockchain replaces human digital labor with automated processes. It also sources global markets for the transaction of goods and services, and does it without the bloat of managing the flow of capital around the world by human means which extracts value artificially. Embracing blockchain technology will continue to erase the abstraction of the value of production.
And yet, it is not the economic policy towards raw goods that affects global costs, its the policy that affects the labor which produces those goods and services which can affect costs the most. The ineffectiveness of tariffs in modern economics is a great indicator of this flawed concept.
Labor holds the true value in the economy. Proliferation of goods and services means nothing if the lower cost of those same goods and services comes from the increased human cost of the labor. Because in that objectification the true value of the laborer is actually lost.
To understand it, let’s return to how I personally exist within the economy. Perhaps after which, you can relate it to how you exist within the economy and further strengthen how it relates to your personal experience within this developing global economy.
For example:
I am a student of political science, I study the world and its people. To do so I subsist on subsidized student loans, on the borrowed value of others worth — a beggar of time and space. In this role, I can choose to labor and to learn, or do neither. I can choose to produce and extract simultaneously, or not. In this role I have become a dependent of society. Essentially free to be free, if only by the means of others.
This existence reeks of worthlessness to the old world, and is at the same time of unlimited potential to a new economy; How can I be worth enough to be loaned money to educate myself to the same value of worth of the loan?
If I do not produce, I have no worth; and yet to be lent such vast sums of cash implies I have worth. This worth without labor is a fundamental benefit of consensus labor. It is an agreed upon contract of worth based on potential labor in a free market.
This consensus of value is also proof that my academic production holds more potential worth than any other labor possible in my economy. For control of the means to access that form of production, a university degree, has now been taken over by the United States Government. They value my education production more than any commodity production in the American economy because I do not have access to commercial loans with the same ease or limiting conditions.
Labor Production
To further explain the concept of potential labor we must look at the various forms of labor in the past: in the old world I could extract knowledge from a collective system of learning spanning the entire world and its people through time, while also producing something for that world to use in return through a trade or skill — this is labor production.
The creation of something-from-something: turning a stone into a statue, a book into a dissertation, or plant oils into art. The additional creation of social classes allows the low cost labor market to exist; there must be makers and takers in an exchange system which values the labor of each independent actor at a different rate based on the skill they have learned over time, or the resource they extract.
In that exchange of rates lies my value, yours, and all others. An entity must be entrusted to conduct this exchange of labor production by creating a currency which allows greater liquidity and interchangeability.
The real value of the currency is normally measured only in the labor produced by that economy.
In other words, the entire economy is based on trust, in which a centralized entity is authorized to establish the rate of exchange, and is using relevant market data of the labor economy to do so. It may also fully dictate the value of all independent laborers within that economy by rewarding them with cash based on the product of their labor.
External to this centralized entity empowered to create a currency lies the various laws and regulations created by oversight agencies to protect the future value of labor by further methods of abstraction.
This is done in the formation of secondary markets where the flow of value is only barely related to the actual production of original laborer. It is in this concept that humanity conceivably exploits the value of others by abstracting their labor into markets where they eventually lose access to the markets and the primary value contained within them.
The financial system of the modern world was created to protect the value of the production within a society through the abstraction of that labor into cash and protecting that purchasing power of that cash globally with military power.
It is in this abstraction that I may equate my dependency, my role as a student living in debt, to the labor of a man who toils in a field, or works in a factory and how the exchange of such value creates a global economy.
In these separate markets, there exists an exchange rate that is controlled by a wealth protected by might. The value of the laborer opposite of me is missing the abstraction of might in order to make his value equal mine in a free market.
He does not have the power to argue against a larger economic entity that his value in relation to his production is equal to mine.The regulation of the rate of exchange is based loosely in law, and strictly in perception.
We have established one of these perceptions to be military based, yet there exists many others. While each domestic society maintains their own unique perception, governments may work together to enact laws that balance the operation of their economies between borders. This inter-operation is based on trust.
We trust governments control the rate of exchange through specific mechanisms called banks which, again we trust. These banks manage the flow of cash in relation to labor as described by the treasury.
Back to my specific example: while there are many forms of lending through banks, student loans are most evident in the control of an exchange rate between the abstracted production of labor and the value of the individual to the economy.
If I take out a loan to learn, the knowledge itself becomes dependent on the labor used to extract it, a labor that I am indebted to perform. So that if I borrow money to learn, in order to be of more value to society, I am already indebted to society by attempting to learn.
The labor has become objectified and therefore its value has to be realized or else the worker is a slave. I have assigned myself a debt-future contract at a leveraged margin based on the value of my life as determined by the potential value I may create for my nation.
By not realizing the value of that specific form of labor as production in education the concept of ‘human capital’ is reduced to ‘human commodity’, and the student must accept themselves as a slave to the system. Instead of production laborers they have become alienated objects.
Essentially if this concept is realized at a macroeconomic level, a certain portion of the youth population can be used as a resource to farm debt in order to print more cash to hedge organic inflation in the domestic economy for the remaining population.
As student loan debt increases the ability to print more cash also increases, which in turn allows more loans to be given out, and even more debt accumulated. This new labor mechanic is a futures play where labor is tied to the value of production and not goods or services it creates. The labor of education is valuable, but only when realized in the future.
Therefore as a student, I exist as a time-slave within a labor based economy that produces no current value, only future value. I am the object in which the value of currency is created from debt attached to my present being which can only be realized by the value created by my future self; a self that through further objectification could cease to exist as a producer.
The real value in labor production is created when you blur the lines between human capital and human commodity. Where human capital investment is not a priority and labor is rewarded based on centralized control economic prosperity is limited. To reverse these limitations simply decentralize access to human capital potential.
In a centralized system control of rewards is dictated by an oligarchy that’s interest is in maintaining the value of the commodity in relation to the supply of the labor. They do not want the free market to dictate the value of that same labor without controlling the flow of cash that is created by that labor.
However, as the world continues to globalize and we reach new levels of economic interdependence, we start to see that fiscal policy that limits foreign economic interaction, restricts loans with high interest rates, while inflating the currency to maintain their own ledgers only disrupts the organic growth potential that technology brings to human economies.
Technologies like blockchain which help to decentralize access to production value become increasingly attractive to the creditors and debtors alike as themselves as they start to understand their own inherent value.
As production labor adopts technology that allows its own value to be less abstracted by friction based services it helps build a new framework for the rest of the world to also adopt the same technology.
This network effect then allows liquidity to take over, and gravity to take over after that; like how many little streams joining together creates the mighty river. Our human civilizations always seem to sprout up next to those specific geographic points with access to liquidity, seeing as it provided the easiest access to the flow of new goods and ideas.
But that is all of the old world. The new world lies in the value of consensus labor. The same rivers exist and new ones sprout up every day, they are just digitized. the technologies that allow humans to transact with digital goods and services in a free market are going to be the same tools that change the world fundamentally from this point on. Understanding how they work will be pivotal.
The civilizations of the future will be built along new digital liquidity coordinators. Yet, the one major difference between future society and that of that past is that the value of the production in the future economies will be measured at the individual level with technology enabled by distributed ledgers.
Consensus Production
And once again, back to my specific academic example — the western example, the typical United States story: the unrealized labor of the student in the labor production economy is what gives rise to the possibility of a consensus production based economy.
My ability to take a loan out from the government to receive an education is an economic relationship built based on trust and validated by standardized academic labor. An agreed upon future value of production of which a conditional contract is built upon is the basis of my higher education and its potential value.
To elaborate further, consensus production is a form of imaginary labor based on a an abstracted time relationship; the labor does not need to be realized immediately in order for the value to be realized immediately. Because of this, most frictions within a labor production economy are not as present when abstracted to a consensus economy.
There are three important aspects of consensus production that are required to grow into a consensus economy or ‘Internet of Value’: scalability, liquidity, and Interoperability. Scalability ensures that as the volume of consensus labor increases, the exchange rate experiences the least amount of volatility possible.
Liquidity is generated in stable growing markets as the risk associated with friction in trust is reduced or removed. Finally, Interoperability creates seamless transitions between various types of consensus labor (as production labor is phased out) contracts and their associative secondary markets in the form of raw goods, unrealized labor, services, and even bonds.
Because I exist with enough trust within my economic system, I am given access to fiscal tools that others would not have if they didn’t have they same trust from their own economic comptrollers. What happens when trust can be established through engagement across borders?
If I build value by increasing trust within a decentralized network through my consensus production, then access to financial tools through that same system are increasingly made available. If I create global value through education, can I not then source the financing of that production globally?
As more potential value is created by sacrificing production labor for consensus labor due to the costs of production being lowered, the value of the labor itself increases fundamentally. It creates the ability for concepts like education to be funded based on the potential value they will bring a future economy.
As more trust is established within this new rapidly growing production network, more consensus is required between trusted nodes to validate the new market participants; the trust builds upon the consensus of the production within the network, also known as validation.
This validation is imperative because it rejects the previous production labor concepts of controlled and abstracted value by having a centralized entity affirm or reject the transaction. A gatekeeper that can create arbitrary bias.
Decentralized validation requires consensus to affirm a transaction, and if the centralization of the validation does not increase the cost of production, while simultaneously not introducing bias centralized controllers, the entire economy becomes more valuable.
Now some form of centralization is necessary as a fail-safe to vet the validity of the new participants, as validators join and leave the network, an initial trust-relationship must be established and strengthened from some entity that has custodianship of the data on the network.
Once enough primary relationships have been established, these new validators can further decentralize the system by repeating the process to bring new partners on. Overtime the custodian ship itself can be decentralized and abstracted to fully erase the potential of tampering with a ledger.
All of this combines to create a decentralized transaction ledger that is immutable, as not one centralized authority has the ability to accept or reject transactions within that ledger without establishing consensus from the other validators. Bias is not introduced, labor can be realized at any time, and yet value is moving instantly and infinitely faster over time.
Banking With Bits
