Reciprocity in the third millennium E-Book

Derek Queisser de Stockalper

• Herausgeber: Éditions Slatkine
• Kategorie: Fachliteratur
• Sprache: Englisch

Seitenzahl: 112

Veröffentlichungsjahr: 2019

Beschreibung

A fundamental approach to the structure of the economic evolution, the impact on geopolitics and the role of new social rules.

What does a house, digital data and social connections have in common?
They all are asset classes of a physical-digital economic space.
What does a village marketplace, YouTube and a blockchain have in common?
They all are resource allocation mechanisms.
What does trust and geography have in common?
Both will be fundamentally transformed by the digital revolution.

Book II builds on the twin concepts of “reciprocity” and “social contracts” discussed in Book I and introduces a new game analogy to better understand the impact of digitalization on our incumbent systems. For example, who will be the new “players” of this post-modern socio-economic game? How will new reciprocity mechanisms impact geopolitics and social rules? Can a new game generate sustainable systemic behaviors over the medium-term?

Book II identifies a profound paradigm shift that will enable the emergence of a fourth family of reciprocity mechanism. This will result in a novel and complementary resource allocation process that should gradually help us address some of our major social and environmental challenges at the start of the third millennium.

In this second volume, Derek Queisser de Stockalper helps us understand the rapid evolution of our economic systems and its impact on our modern political and social structures.

EXTRAIT

Societies have evolved from simple hunter-gatherer community structures tens of millennia ago to gradually more complex structured Societies millennia ago. With a growing number of individuals competing for limited resources, it became imperative for communities sharing common values and culture to organise themselves more formally to address their social and economic agents’ basic physiological needs and craving for physical security. As we have seen in Chapter IV of Book I, various resource allocation processes – based either on gift, balanced or negative reciprocity – developed over the ages to address the resource allocation needs of communities. As a result, or sometimes in parallel, various political structures and Social Contracts emerged to define and organise the living rules of these nascent Societies. Interestingly, the German Sociologist Georg Simmel notes that the simple formalization of a common reciprocal mechanism, such as a common negative reciprocity currency, is enough to justify a shift from ad-hoc or anarchy-like community dynamics to formalized rules-based Society dynamics.10 With time, emerging political and economic rules were formalized within explicit or implicit Social Contracts that eventually led to modern political structures such as the Nation-State.

ABOUT THE AUTHOR


Derek Queisser de Stockalper is the founder of Queisser & Cie / Qanalytics, a Swiss-based strategic and investment advisory boutique addressing the investment needs of sophisticated capital owners in a low yield environment. He graduated from St Andrews University (Scotland) with an MA in Logic & Metaphysics and International Relations and received an MBA in Economics and Finance from Columbia Business School (NYC). He has collaborated over the past 25 years with various organizations such as J. Henry Schroder & Co, Credit Suisse Financial Products, the Lloyds Banking Group, Firmenich, P&G, DNDi, ESA, IUCN, the UN, the World Bank, as well as with major foundations and family offices in the fields of impact finance, sustainability, conservancy, health infrastructures, education and youth.
In parallel to his professional activities, he is developing novel FinTech solutions to facilitate the emergence of a more balanced and inclusive financial system.
Derek Queisser de Stockalper lives in Geneva, is married and has two sons.

Leseprobe

Couverture

Page de titre

BOOK II

PRESENTATION

We live in very interesting times. Globalization, demographics and steadily increasing average wealth, which over the past two centuries, has reached a level where in the developed world, for example, the middle class has a comparable lifestyle to the affluent class of a century ago. New technologies and telecommunication systems are cementing a truly global information exchange economy. But excesses are accompanying these successes. Our Market Economy or capitalist system is generating exponential economic growth1 dynamics leading to Natural resource and environmental challenges,2,3 as well as increasing wealth gaps between the haves and the have-nots.4,5 Although digitally connected, we also feel more and more disconnected from our next of kin, local communities and families.

These Socio-economic “ills” are the tip of the iceberg, so to speak. At the end of the 20th century and start of the 21st century some of the strategies identified to address these social, environmental and economic challenges were encapsulated in the concept of sustainable development.6 In the past few years, a new and more specific approach has emerged with the concept of sustainable or inclusive finance.7 Although difficult to define precisely, as still in its early evolution phase, sustainable and inclusive finance mostly attempts to develop financial tools and processes to help mitigate social, environmental and economic challenges in both developed and emerging economies. In the not too distant future, novel technological solutions initiated by the so-called Fintech8 revolution may propose entirely new products, business models and strategies to positively affect our overall economic system behavior and thus help mitigate some of our identified sustainable development challenges.

But these converging social, environmental and economic dynamics remain extremely difficult to apprehend or grasp in a rapidly changing world.

In this essay, I will attempt to take a different, somewhat more fundamental, approach to understanding how financial tools and their resulting Socio-economic structures or systems evolved in the past and may evolve in the future as a result of rapid systemic changes. For example, the shift from a closed to an open geography Socio-economic environment through the digitalization of our economy should have fundamental consequences for our behavior as agents of an open economic system and for how our traditional financial mechanisms address market needs, which as a result should impact the way our overall Socio-economic system evolves in the coming years. This is why I strongly believe that a fresh and complementary process of enquiry is now needed to assess and gain insights into these major paradigm shifts.9

I will thus not focus in this essay on current inclusive and sustainable financial products such as SRI, ESG, Impact Investing or Microfinance solutions, or new regulatory incentives such as eco taxes or carbon trading mechanisms, but instead focus on a more fundamental relationship present since the oldest of times among agents of a given family, community or wider Socio-economic system to allocate scarce or non-scarce resources: namely the concept of reciprocity.

Thus to start our journey, I will assume that resource allocation processes are major vectors of the development of Societies or Socio-economic systems. We will see that over millennia, various resource allocation processes have been central drivers of the formation of economic, social, but also political structures. I will attempt to show throughout this essay how such reciprocal processes have defined the way individuals, groups of individuals and communities interact and how, as a result, formalized Societies’ economic, social and political fabrics emerged and took shape.

I have always strongly believed that economic processes create Natural incentives, positive or negative, which ultimately influence how a given Society structures itself and how its actors ultimately behave. Thus, if we take a fresh look at the history of humankind’s resource allocation processes and their underlying reciprocity mechanisms, we may eventually stumble upon important insights that should help us assess how our modern Societies and their agents’ behavior could evolve in the coming years to achieve a more inclusive and sustainable overall Socio-economic system. These insights will in turn help us better understand the mechanisms of our present financial system and how it could evolve to drive a more secure future for us, our children and our surrounding Natural environmental and social systems.

To formalize this new enquiry process, we have first defined in Book I a new framework of reference to help us observe and compare the tools – or reciprocity mechanisms – driving our past, modern and potentially future resource allocation processes. This has then enabled us to identify emerging systemic Socio-economic rules, dynamics and behaviors. Then, with this new framework in place, we have embarked upon a “voyage” through history to observe how simple resource allocation efficiency improvements have been over millennia the key ingredient for communities and later formalized Societies to evolve somewhat sustainably, in both social and economic terms. Finally, we have observed that some of our modern resource allocation processes and mechanisms are creating today new and profound inefficiencies.

In Book II, we will attempt to identify and define the dynamics of our modern Socio-economic system and then identify some solutions to mitigate our modern Market Economy “Ills”. Book III will be an in-depth analysis of some of these new solutions and their potential impact on our modern Socio-economic system.

1 Stiglitz, Joseph (2011), The Ideological Crisis of Western Capitalism, Commentary, Project Syndicate

2 US Global Change Research Program (2014), Climate Change Impacts in the United States, US National Climate Assessment

3 The Risky Business Project (2014), The Economic Risks of Climate Change in the United States

4 Piketty, Thomas (2013), Capital in the Twenty-first Century, Harvard University Press

5 Oxfam International (2014), Working for the Few: Political Capture and Economic Inequality, 178 Oxfam Briefing Paper

6https://www.iisd.org/sd/

7http://responsiblebusiness.haas.berkeley.edu/programs/sustainablefinance.html

8http://en.wikipedia.org/wiki/Financial_technology

9 Please see this essay’s Acknowledgments section

INTRODUCTION TO BOOK II

Societies have evolved from simple hunter-gatherer community structures tens of millennia ago to gradually more complex structured Societies millennia ago. With a growing number of individuals competing for limited resources, it became imperative for communities sharing common values and culture to organise themselves more formally to address their social and economic agents’ basic physiological needs and craving for physical security.

As we have seen in Chapter IV of Book I, various resource allocation processes – based either on gift, balanced or negative reciprocity – developed over the ages to address the resource allocation needs of communities. As a result, or sometimes in parallel, various political structures and Social Contracts emerged to define and organise the living rules of these nascent Societies. Interestingly, the German Sociologist Georg Simmel notes that the simple formalization of a common reciprocal mechanism, such as a common negative reciprocity currency, is enough to justify a shift from ad-hoc or anarchy-like community dynamics to formalized rules-based Society dynamics.10 With time, emerging political and economic rules were formalized within explicit or implicit Social Contracts that eventually led to modern political structures such as the Nation-State.11,12,13

As a quick reminder, the political Social Contract guarantees the citizen his or her physical security and a fair, or in some cases coercive, social Justice in exchange for the citizen to forego his or her right to anarchy.14 The economic Social Contract on the other hand assures the availability of a resource allocation mechanism, today mostly national fiat currencies, in exchange for the payment of a tax to the currency issuing entity, today mostly a Nation-State’s Government or its Central Bank.

We have also observed that a modern national currency’s use and influence can grow way beyond the jurisdictional or physical boundaries of a Nation-State. For example, the US dollar currency’s use and influence clearly transcends the physical geographical borders of the US Nation-State. As briefly discussed in Chapter VI, we have called this currency-led sphere of influence a Private Economy, or in the specific case of the US dollar currency, the US Private Economy.

The combination of all types of communities, Societies, Nation-States and Private Economies are the major building blocks of a dynamic and constantly evolving Socio-economic system. A Socio-economic system will in turn define how a Civilization behave and evolve at any given time in history.

Fig. 23 – Structural Socio-economic Systems Definition

After this brief reminder, let us now focus on the key question underlying this essay. What type of Civilization does our Socio-economic system components foster today and how will it evolve in the coming years or foreseeable future?

As we have observed in the last chapters of Book I, Nation-States structured on modern Social Contracts and centrally issued national currencies do not seem to address the rapidly evolving needs of our Societies, communities and socio-economic agents anymore. The Fairness or Equity definition of social Justice driven by material accumulation and the traditional social layers of Societies do not seem to suffice to satisfy our modern citizens craving for sustainability, inclusiveness and meaning.15 Is it because we have arrived at the “End of the History” of our modern Socio-economic system, as we have known it?16 Or is it because our modern Societies structures do not fit the needs of their socio-economic agents anymore? Or is it simply because of the emergence of an interconnected world, where historically captive geographies rules have become less and less relevant? Or, has the goal of our social Justice simply shifted towards more Individualistic and Utilitarian dynamics?17 Or worse, is our system at risk because our modern Governments cannot assure the basic physiological (wages and social support) and security (physical and environmental sustainability) dimensions of their modern Social Contracts anymore?

We have observed in Chapter VI of Book I that our current Socio-economic system (or aggregation of Private Economies, Nation-States and Societies) faces three major challenges: the de-anchoring of social stability, the mirage of longer-term sustainability and the citizens’ loss of meaning or personal happiness. These “Symptoms” may be the indication of deeper “Ills”. Thus, our immediate challenge should be to find a coherent, sustainable and fair system to address our loss of social cohesion, the excess usage of our natural resources and the growing feeling that our modern Societies do not have a clear and sustainable purpose anymore. Citizens are craving for meaning beyond physical needs (physiological) and social belonging (role within the community and the ego) that are the bedrock of the agriculture and industrial revolutions Fairness and Equity social Justice systems.

There is no single solution to address our Market Economy system’s “Ills”. The world is diverse and leads to a wide variety of social and economic agents’ needs, aspirations and resulting Societies. Explicit or implicit Social Contracts are as diverse as there are Societies. But one common thread across all these Societies remains their use of a currency, or an equivalent reciprocal mechanism, to address their communities and socio-economic agents resource allocation needs.

Currencies, and their resulting Private Economies, have through the ages been key vectors of economic wealth growth and social fabric formation across local, regional and international geographical spaces alike. Thus, focusing our energy on identifying how our modern negative reciprocity mechanism may evolve to help address some of our Market Economy excesses should be a good place to start to attempt to address some of our modern Socio-economic system’s unbalanced or unsustainable development.

By combining the ancient art and custom of the Traditional Economy reciprocity mechanisms with the efficiency of our modern Market Economy reciprocity mechanisms, may be an interesting enquiry approach to identify new solutions to strengthen, or re-tool, our communities’ social fabrics, address some of our Societies’ aspirations for more meaning and instil even some sustainability dynamics, or more importantly, behaviour within our financial and Socio-economic systems development, while at the same time still benefit from today’s highly efficient negative reciprocity monetary resource allocation processes and infrastructures developed over the past few centuries.

I realise that this is an ambitious goal, but like everything in life one must be ambitious to embark upon a new journey. And, as we all know, a journey starts with a first step. Well this essay, and most specifically Book II and Book III, is my personal first step.

10 Simmel, Georg (1907), The Philosophy of Money, Routledge Classics

11 Aristotle, Nicomachean Ethics, translated by Weldon, J.E.C. Prometheus Books (1987)

12 Gilby, Thomas (1951), St. Thomas Aquinas Philosophical Texts, Oxford Univiversity Press

13 Nozick, Robert (1974), Anarchy, States and Utopia, Basic Books Inc.

14 Hobbes, Thomas (1651), The Leviathan, Yale University Press

15 Maslow, Abraham (1943), A Theory of Human Motivation, Psychological Review Article

16 Fukuyama, Francis (1994), The End of History and The Last Man, Avon Books, NY

17Seehttp://www.investopedia.com/terms/u/utilitarianism.asp

CHAPTER VII Evolving Social and Economic Systems Rules

Before identifying some Solutions or Remedies for our Socio-economic system’s Ills, let’s first clearly define the problems we are faced with.

I would state that the key question we need to answer is as follows:

On a structural level, where does our current Socio-economic system fail today?

Today’s Structural Failings