This is part 2 of an interview with Grace Rachmany, of DAO Leadership and Voice of Humanity. She has some very interesting ideas around currency design and building a new economy based on community / reputation.

As with all our interviewees, we think you’ll be interested in her ideas, and what she’s up to.

In Part 1 we talked about Grace’s ideas around system change – transcending slowly to a new kind of economy, starting with the exchange / monetary system, and building reputation within communities and between communities.

Here we’re talking about a game that Grace is organising in Spain, to test her ideas.

Are you getting together physically to play the game?

Yes. In Navarre. I’ll be travelling there next month, meeting with communities, and we’re going to get 20-40 people together to play the game (any more than that will be too much). This is a simulation. I’m from the software world, where people build something, then try it out. I’m going to try something out, then build it.

And is your solution a software-based solution?

Yes. And only communities can use it. So a purchasing manager of a community, and maybe a few other people, will use it on behalf of the community.

And do you register what you’ve provided or consumed?

Yes. So I’ll explain the game. People will each represent a co-operative or an ecovillage or a social enterprise or a farm. Each person has a card with the attributes of the group they’re representing. People will interact in certain ways. One way is a swap.

It’s hard though, isn’t it, to find someone who wants what you have and has what you want?

You may be able to find a swap, you might find a third party for the swap, or you might know that the group has a reputation for generosity / giving things away / paying things forward. You might also know that they do things in a very environmentally-friendly way (and you live close by, so they’re helping keep your environment clean), so you’ll just give them something / provide a service for them without anything in return. If I need something from them in the future, I know I can call on them.

So if, for example, you were part of a co-op producing, say, furniture – you’d just release furniture into the community, for free, in the hope that others would provide things for you?

Maybe – and maybe sometimes others will pay you. You could give members of your group a discount. At the end of the interaction, the currency that we’re tracking is your reputation. Say you sold me some furniture, at the regular price, because we’ve never worked together before and we don’t really share values. I’d rate you as not very generous or ecological, although I might rate your furniture as high-quality and your business as very professional. Then people know your reputation and has the option of whether to work with you. Apart from transactional activity, in this area, there’s also community activity. There might be a call-out for tree-planting, litter-picking, decorating the old people’s home etc. It’s not transactional, but value is created. It’s another way for groups to enhance their reputation.

So could this be described as an ecosystem of payment systems with online reputation?

No. It’s an ecosystem of reputation, measuring the actual value and values of communities. It’s oblivious as to whether you use money. In the community activity, and in some transactions, no money changes hands at all.

So you might call it a type of gift economy?

I’d call it sharing. It’s really interesting in this conversation that you keep going back to money.

Not money. You know that I’m in the mutual credit world.

I consider that money.

But I talk about mutual credit in terms of recording who’s done what. That’s all.

That’s not how I see it. First, for me, it’s always about a community – never an individual. That has a different dynamic. If you know that you’re representing your town / your community, then the whole community is going to be damaged if you’re in a bad mood that day and behave badly. It’s also how companies work. If someone who works for a particular company does a bad job, the company suffers loss of reputation. It’s a group-to-group reputation, and you know that.

I’d love to see your ideas in action. I’m very interested. I have some questions. You talk about operating through a group. What if you’re a sole trader, or you just want to be self-employed?

I think sole traders could be part of it a few years down the road. It’s not banned, but you’d have to join a group of ‘mutual vouch’. That might be a group of, say, electricians, that vouch for each other’s work, and give each other ratings. They’re not a company, but they vouch for each other. And if someone’s no good, they get kicked out.

Like a guild?

Yes, I’ve used that word before. A guild could have a reputation. This one lets anyone in – sometimes they send somebody good, sometimes somebody bad. And the guild protects reputations from customer ratings. So if a customer gives a bad rating for a job, and the guild sends someone to fix it, and actually it was a good job, the reputation within the guild remains unchanged. If the guild itself has a good reputation with other guilds / groups, then the guild’s ratings will be respected.

A lot of what you’re saying sounds similar to our mutual credit clubs idea. If you don’t play the game, you can’t be in the club. You have to be a decent person, you have to provide proper services and you have to be trusted.

I think that’s right. And the Chamas at Grasroots Economics are similar too – they all vouch for each other. But although this happens less in mutual credit, some people accumulate more, because they’re more profitable, better at business, whatever.

But there are limits in mutual credit. So if you’re reaching your credit or debit limits, you have to buy more from others or sell more to others to move towards zero.

The reality is that some businesses go bankrupt and some people die. In fact, all people die, eventually. If they die with profit, it goes to their heirs. If they die with debt, it dies with them. If a business goes bankrupt, their debt disappears. And every monetary system will end up that way. So if you have a chama or a vouch group, you have to forgive some debt. You have to account for that, because money disappears sometimes. In many tribal or close-knit communities, no-one is allowed to accumulate too much wealth. If you have too much, you have to throw a big party for everyone. One of the things that our current system has done badly is to try to redistribute wealth via bureaucracy. There’s no relatedness between individual people, just bureaucracy. I think that’s the wrong approach. I think the way you’re looking at it and the way I’m looking at it is the right approach. You belong to a community, that has a social network. The community might be embedded in a state that helps out poor communities, but the distribution between people has to be done by the community, otherwise you get free riders, and situations where it’s better to get benefits than to work, if there’s work available. We’ve seen the failures of social distribution by bureaucracy. I do like the idea of these ‘clubs’ that you’re talking about. The problem might be though, that the people who do the best work, and charge the most, might not want to be in the club.

I have some friends in a DAO. They’re artists, and they’re trying to create a system in which the artists support each other. But let’s say one of the artists in their guild becomes really famous and starts making a lot of money. All the other artists are starving artists. It’s a familiar picture – it’s how the art world works. A few are rich, the rest are struggling, but they love painting. What if this happens in a mutual vouch group? How much do they want to share now?

This is quite marginal though isn’t it – people becoming famous artists? I’m talking about little local economies with plumbers and smallholders etc.

It happens all over the place. I’m the top writer in the ICO world, and I charge more than others, and I write very quickly. Why would I want to share with others if I’m better?

But in a mutual credit world, you just get credits, up to a limit.

But what am I going to do with those credits?

You’re going to need food and clothes and shelter etc. like everyone else.

But in a mutual credit system, I can’t accumulate those as savings for a college degree, for example.

Ah – this is a whole new conversation. It’s where ‘use-credit obligations’ come in.

But you can see that in a mutual credit system where one person keeps earning a lot more than everyone else, they’re going to want to leave.

I guess I’d let them go.

Then you end up with a system of weaker people.

Not necessarily. I’m talking about where people get their food from etc? I want to get my food from as locally as possible, to keep supply chains short. I want to get quality food from people I trust. In the local food world, no-one is suddenly going to become a mutual credit billionaire – they’re local smallholders and bakers and brewers etc.

It may work. I’m not saying it won’t. In my system (this is a great conversation, btw, to compare the systems) – we have food producers, sharing within the community. People providing essential services are the most important people in the community – food producers, plumbers, the solar farm etc. They all share their produce, but if there is a surplus of energy, the group realises that this is also down to the food producers who provide food for the energy producers. So when we sell the surplus energy, does it belong to just the solar people, or the whole community? Each group can decide. They could take a percentage tax from anyone making a profit in the group. If the energy people provide energy for the community, or local group of communities, the community can decide that if there’s any left over after that, it can be taxed, or the profits can be shared in the community. It’s down to the community to decide.

The beauty of this system is that problems are shared. Right now, if I have a business and I have a problem – say my truck broke down – it’s my problem. But within a vouch community, I will have been sharing that truck. So now we have a problem together, not just me, on my own. Potentially, the community could make all kinds of decisions – like ‘the energy people have made a lot of money, so they can pay to fix the truck; and at the community school, we could teach some of the kids to fix engines / trucks, so that the truck can be fixed, rather than having to buy a new one. It’s very different for a group of communities to have a fleet of 3 or 4 trucks, than for those trucks to be individually owned. That’s where I see my ideas being very different. If you imagine a ‘sufficiency line’ – everything underneath the line gets shared – food, plumbing, electricity, education. Anything above the line – like massages, ornaments, luxury items – or not exactly luxury, but over and above the essentials – you can trade with money. But the community makes sure that everyone gets enough of the essentials. So everyone eats properly, and extra food we can sell, and the profits could be individually owned or shared. But below the sufficiency line, we make sure everyone has enough.

This kind of community resilience is what attracts me about your idea. I think it’s vital. What’s your ambition? Do you see this being replicated in lots of other communities? What about parts of the world that don’t have co-ops or ecovillages – which is most of the world? How do you get into those kinds of communities?

Then we need to have them. You’ve pointed to that. In your system, you’re going to have ‘clubs’. Grassroots Economics use Chamas. We think they’re essential. Any group of local people can form a group and vouch for each other. They can start do things and to accumulate reputation. Unlike money, reputation can be accumulated from nothing. We’re having a conversation now where no money is changing hands, but we’re both creating reputation.

My long-term vision is that this will be a step towards technologies that will replace money.

You see it as an ecosystem of different currencies, or moneyless trading?

Yes. In my system, because we look after each other, there are basic things I don’t have to worry about. If I’m sick, I’ll be taken care of. If I die, my kids will be taken care of. I’m going to have enough food etc. I’m not going to be rich, but I’ll be taken care of. As long as a I put into my community what they require from me. But over and above that (above the sufficiency line), I can do what I like – I can provide things internationally. I can do what I like, because I know that I’m taken care of for the fundamentals. I could spend my time making art to make my town more beautiful, without having to worry about money, because the fundamentals are taken care of.

It looks as though we might be moving towards a world where less labour is required to meet a community’s sufficiency level. What happens with your extra labour – well, you can do what you like – you can produce art, you can contribute to other communities, you can do what you like – and your basic needs are met as long as you’re in good standing with your community. Maybe I can travel. I can maybe stay at hotels in other communities for free if I can show that I’m in good standing in my community.

An example – I’m a Jew. I wanted to go to a very popular holiday service at a synagogue in another town. I was able to show that my rabbi said that I was in good standing in my community, and pay my membership dues, and they gave me a seat. Not the best seat, but a seat. The same could happen with a digital reputation system, so that if I can show that I contribute to my community, I can stay at a hotel (say) in another community. Reputation is very important – to be able to show that I’ve done my share. The reputation system can be digital, but the community has to be real, where you know people and can provide goods and services for each other, and take care of each other.

We could have that kind of system, where I can see your reputation, and the reputation of the community that vouches for you, and if they’re aligned with our values. We could have a lot more systems in place that are values-oriented and gift-oriented, because we’re all taken care of.

I really want to see your ideas happening in the real world, to see if they grow. It seems like there’s lots of overlap with the mutual credit world.

It does. In my system, a purchase order can include goods, services, euros, dollars, bitcoin, mutual credits, or a mix of various types of ‘payment’.

I like your community-based approach. It’s not relying on the state to do anything. I think the state is too wrapped up with the banks and corporations to be useful for the kinds of things we’d like to see.

It’s an evolutionary process. Humans started with families and tribes. We eventually got larger villages and city-states. Now we have nation-states, which are fairly new. There will be new ways of organising – over and above the nation-state. Not exactly ‘above’. I don’t think of my body’s circulatory system as ‘above’ my digestive system or my respiratory system. They’re all equally crucial. I think we’re going to see humanity evolve into these layered systems. What I’m talking about is the beginning of a layer. The different layers will exist side by side. I do think the nation-state has outlived its usefulness. States have utterly failed to properly deal with recent crises, for example.

And if one nation-state decides that they’re no longer going to chase perpetual GDP growth, because it damages the environment, then they’re going to lose out in the global capitalist game. And any government that proposes it will probably lose the next election. So we’re locked into this damaging system of nation-states.

It’s even worse than that. If you don’t want to be in this system, there’s a number of ways the system will get you. The simplest way is to air drop food into poor countries, which will destroy the local food market. Then pretty soon you’ll be in the global capitalist system. And ultimately, armies will be sent in if there’s resistance. It’s true for the Belt and Road system as well as the West. We’ll build infrastructure for you, we’ll give you a loan. Pretty soon, you’ll be in our system. The military option is the most extreme, but it’s usually not necessary.

I’m very interested in solutions that lie outside that system. I’d like to interview you in a year or two to see where you’re at. Hopefully you’ll be growing.

The timeline is that we’ll do this activity in May and to raise some money – around 1.5 million euros for the development. 6 months for development then a one-year pilot implementation. So if all goes well, I’ll have some information about the pilot implementation.

How can people get involved or help in any way?

I’m building up this community. If people know of any foundations or private donors who are interested in investing in future money research (it’s really research – it’s not about profit), I’m happy to talk with them. You can look at my websites (see top) DaoLeadership.com or VoiceOfHumanity.one. You can play iterations of the game with us. It will be fun.

Here’s where you can join the game – https://www.voiceofhumanity.one/reputation-economy-simulation.

Thanks then Grace – it’s been great talking with you.

Super interesting, and I hope that both of our projects move forward, and we can integrate with one another and do all kinds of cool stuff.

Yes, I’m interested in seeing an ecosystem of different currencies and ideas develop, rather than having to be reliant on fiat and the nation-state.

Highlights

1. We’re building an ecosystem of reputation, measuring the actual value and values of communities. It’s oblivious as to whether you use money. In the community activity, and in some transactions, no money changes hands at all.
2. One of the things that our current system has done badly is to try to redistribute wealth via bureaucracy. There’s no relatedness between individual people, just bureaucracy. I think that’s the wrong approach. I think the way you’re looking at it and the way I’m looking at it is the right approach.
3. The community makes sure that everyone gets enough of the essentials. So everyone eats properly, and extra food we can sell, and the profits could be individually owned or shared. But below the sufficiency line, we make sure everyone has enough.
4. Reputation is very important – to be able to show that I’ve done my share. The reputation system can be digital, but the community has to be real, where you know people and can provide goods and services for each other, and take care of each other.