# SESSION 2: FROM CAPITALIST TO POST-CAPITALIST ECONOMY

THURSDAY 14.5.2020 10amPST/1pmEST/7pmBERLIN/8pmHELSINKI

PLACE: ECSA ZOOM https://zoom.us/j/2022138511

Telegram: https://t.me/joinchat/IivZHxdMBb3PKtNDr5QdVg

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READING: Section 2 & 3

**2 Design Principles of the Economic Space Protocol**
2.1 Open: Anyone can create, join, and share economic spaces.
2.2.Scalable: State transitions are local among peers
2.3 Partition Tolerant: Each peer is able to connect and interact with each other directly, not requiring a global virtual central agent, i.e. a replicated global vm.
2.4 Programmable: anyone can extend the protocol to create new financial instruments (tokens), economic spaces (markets) and economic agents (value production organizations) and interfaces for new and existing applications, transforming them into “Economic Apps”.

**3 From Capitalist to Post-Capitalist Economy**
3.1 The agenda
3.2 An economic primer
3.3 The Hayekian turn: knowledge, price and spontaneous order
3.4 Transcending Hayek and his digital disciples: the market, prices and profits as protocols
3.5 Do ‘big data’ change the story?
3.6 A derivative framing of Hayek

LINK TO THE TEXT: [**THE ECONOMIC SPACE PROTOCOL (ECSA ECONOMIC PAPER)**](https://docs.google.com/document/d/1TuTnsh50jtB710D5YwEuIxPG-bT1ZkokCLErV0l8Z60/edit)

LISTENING (70min): **[Crypto-Political Economy - Transcending Hayek and his digital disciples.](https://soundcloud.com/user-177407194/crypto-political-economy-ch-2)** *Akseli and Dick discussing the ECSA economic paper Section 3, in Berlin 23.9.2019. Economy as a network. Capitalism as a narrow definition of a network. Hayek and his digital disciples. Radical Markets. Price, market and the rule of profit as a protocol. How to challenge a protocol? Economy as a design field. Markets that pursue other goals than individual profit. Randy Martin and the social logic of the derivative. A new economic grammar. What is at the core of the ECSA project.*

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# [SESSION VIDEO](https://www.youtube.com/watch?v=5wve9owUV7k)

REFERENCES MADE IN THE VIDEO

**[Jorge Lopez: A Distributed Exchange Protocol](https://www.youtube.com/watch?v=TGuPuXapz68&feature=emb_logo)**
(ECSA economic paper session at MIT 15.10.2019)

**[Dick Bryan & Akseli Virtanen: What is stability? The time of alternative money](https://medium.com/econaut/what-is-stability-50655254124 )**

**[Dick Bryan: Valuation crisis and cryptoeconomy](https://medium.com/econaut/valuation-crisis-and-crypto-economy-39c5b7e373af)**

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# SESSION NOTES

will be here after the session

**Akseli:** Couple of points about DeFi.

Stable coins: we are thinking that the stable coins as they are right now conceptualized and built in defi space, you ahve a stability with respect to basket of fiat currencies. It is oxymoron, what kind of stability is that if it is backed by an instable-fragile framework ?Where do you go when you want to short- bet against fiat currencies? You need to find new forms of sociality or new forms of stability because that is really the potentiality of cryptos in our perspective.

Why are these stable coins so hot at the moment? Has to do with dramatic shifts of cryptocurrencies. Sign of pure market speculation, just indexing success of a rhetoric. That's it, which makes them interesting but weak. There is no ground to devalue. This ground that we call fundamental value, to bind the token and underlying value that gets created. That's where we are working on.

There are couple of interesting initiatives. But they will also realize that collaterlization can be the economic activity of the network. That you can actually create your own liquidity.

**Jonathan:** I feel like people will be wondering about the category of fundamental value. I don't think we have to go too deeply into that right now because I realize you have an agenda here, but in my understanding of what ECSA has been working on; the narrative dimension doesn't disappear actually. I mean you anchor fiat currencies to various narratives or cryptos to various
narratives. Fiat currencies and their national intelligibility as big platform on nation-states is also a kind of narrative which secures their value. So you have all these different competing values which is basically these discursive worlds on index to these currencies, which are fluctuating against one another in all two markets.And if we're gonna introduce some
fundamental values, but I think we might be saying and the way I think about is we're actually trying to tell a more powerful story, which is going to get deeper by and longer term commitment and be more persuasive than existing stories about money and finance.

**Dick:** About the concept of underlying value.
Important is that the world of tokens and new currencies, in that world there are lots of claims, narratives about outputs-productivity-creativity. Concept of fundamental value is our claims about economy are verifiable, they will be shown through transparent data. So, who is in the capital markets will realize the ability to short capitalism by going long in this economy. And they can verify this economy. That is what the fundamental value is aspiring to verify.

**Akseli**: Fundamental value is in the later sections, above discussion is just for the warm up.

***Section 2: Design Principle***

**Akseli**: Section 1, we are trying to say that we are building this economic protocol with the internet architecture. It can make informational values economically expressable, and it gives everyone the same capacities to issue and clear stake. We call it post-capitalism because it actually challanges capitalism as financial system to create this economy, challanging what counts as liquidity,colleteral, and who gets to decide about this.

Section 2: We want to build this protocol-language that agent used to interact, and the questipons about design principles- what we think necessary conditions to build this framework.

**Jorge**: the internet as a network has very interesting properties and evolution. One of the most permitted networks was having a big frame network in terminals that needed big space, limited speed and amount of users. Then networks progressioned into not needing central house. Instead, peers/nodes could speak to each other. To do so, they needed to share a protocol, a particular one that is very important to us: concept of routing.

Peers can function as peers and hubs.That will allow each peer to intermediate through other proxy routers others to reach someone else. And what did this
notion ofrouting on a network was to allow massive skill. Every node could interact with the other. This required the use of shared protocols, everyone had to share the same language and understand the samge game, the game of passing messages around and want to do want to know if something is being addressed to me something is, addressed to someone else. These are the design principles that we are planning in economy.

We recognize it as network. There is no need for centralization, we can more like internet, we dont need using big computer. Now we can do p2p with a shared protocol.

This sort of networks are scalable, can grow very fast, partition tolerant- users can connect/disconnect but system continues to function. They are civil attack resistant, you cannot fool other nodes. It is private, my comp is my information. It is open, anyone can join and be part of the network. There is no sort of guardian at the gate. Most importantly it is programmable, many of protocols can be modified to serve different purposes. Example: When you write http you say hey browser talk to the server with http protcol.

It becomes a communication device to for you to use your particular web application. All web applications in
a way can be also understood by the means of protocols.

These are the properties that we are embedding in this economic protocols. Our understanding is base protocol is there, but crucial is how it is utilized and expanded.

**Jorge**: How network topography differs from centralized monetary networks.

Concept of credit issuing and credit clearing as one of the functions we embedded in the network that is facilitated by base crotol. The core protocol in the economic layer is distributed exchange. Same logic and grammar as exchange. I make orders to trading agent, who is in constant communication with other agents in the network in order to match the orders. Very similar to how financial exchanges used to work in a way. That allows agents to issue credit, but most importantly clear credit. It doesnt report to one central clearing house, it can transittily. The network can find circuits of who owns what owes whom. Can work as clearing house.

**Akseli**: Distributed exchange presentation in MIT, let's link that to presentation- let's add that to the list, clearing-netting- key aspects of protocol.

**Akseli**: Privacy. Econ exchange to be private is not possible in the current public blockchain environments. 2nd one is that There is no virtual clobo-agent, which means that how current blockchains are working is out of picture. The design principles in this section point to
a need for different kind of programming language- distributed network protocol.

Isn't it saying that current blockcahins won't work? We need a different kind of substrate.

**Jorge**: Blockchain is very loaded term. Most systems under the label of blockchain are massively replicated virtual machines that can't scale. Until their logic gets challanged and seen as something that can be converted into a lot of concurrent collaborative executions through protocol, the myth of central blockchain will persist. It has to do with architectural biases under which most of us engineers have been trained on. Most network engineers already know that the means to this kind of scalibility is hidden in protocols, and that is what's missing in blockchains now. Now most of these blockchain architectures utilize p2p protocols to broadcast the big virtual machine. But they are not going where their capacities are hidden. There are others that do, but there are different design principles and constraints we are operating under.

**Jonathan**: to Akseli, The fact that you made that addendum actually maybe speaks to the need to have something a short couple sentences on the problem with positioning block change if it's not explicitly stated. I mean it would be actually a nice contrast to sort of show the limits of the single virtual machine and problems of scaling in contrast to the protocols.

***Section 3: From capitalist to post-capitalist economy.***

**Akseli**: Earlier we called it crypto-political economy.

First section is called ECSA agenda. We are trying to say in the intro., open the discourse that economy has a history and a future. Its key conventions are design-space where we are focusing. But yes, we cannot do this in a vacuum. A lot of people have been working on these economic protocols, we want to learn from them, deconstruct and pick apart some of the key economic categories, and reconstruct in a way that this situation allows us to.

When you look at eocnomics, it is important to realize that unlike other social sciences it presents itself as orthodoxy. Best way to understand economics is as an engineering effort.

We are trying to point out that when you look at the crypto economics discourse, it is thought in a very conservative and orthodox way. This orthodox economics blocks the real potential to build something radically different. Radical politics and economics. This is the position we are trying to take, and end by saying that you cannot seperate economics and politics, which is surprisingly something new to a lot of people in crypto sphere. We are aware we belong to the political economy tradition.

**Colin**: To return to fundamental values and narratives in the context of what you are saying, the real fundamental problem about bitcoin is as a discourse narrative about money. The narrative is that this is a money which will appreciate in value, that's why you want to buy it into the first place. Founded upon a Ponzi- finance idea. Idea is that bitcoin is solving a problem with money which is that money is losing it's value.

The idea of fundamental value is always kinda nostalgic, people come to be aware of fundamental value because it is perceived to have been lost and in the money.

Bitcoin is this narrative about how you will have money which won't lose value but always appreciate.The major motivation with people to invest in bitcoin. The problem is this is subject to modern bias about problem with money. In 20th century the issue was money loses value. For the vast majority of history problem was deflation, not inflation. Deflation is a problem because it creates debt-crises. So I mean think about how insane you would have to be in order to take out mortgage on your house denominated a Bitcoin if the entire reason that you want to participate in the Bitcoin economy is you're expecting enormous capital gains I mean you're just signing yourself up to that does make any sense.

So, The problem is when you reframe the problem of money as not inflation but deflation is problem, the whole issue is how you can intervene into the money to solve the problem of deflation. Thinking about narrative of bitcoin is, here is a money that no one can take away its value. I can hoard this money, and it will be good for me. That is the problem, that is what monetary interventions by states throughout history are motivated to prevent, is to prevent hoarding to prevent the problem of deflation.

The issue how do you present a narrative about that? a lot of people wont' get excited with seeing this money is great because it loses value.

**Jonathan**: Want to add to Bitcoin narrative. Another persuasive way is taking this notion of disintermediation. Because there's always untrustable social forms, mostly governments, States, and banks, and their interests which affect money in one way
or another, which a lot of people who believe in like free markets and Hayekian notion of pure price signals being able to adjudicate among agents. So there's a sort of a very libertarian notion behind Bitcoin which is part of its appeal as well. It's the technology actually precludes that intervention on the protocol unless there is network consensus effectively. And that kind of interventions that can be made are quite small compared to the big architecture of the code. I think it's important to mention because it shows that the narrative of bitcoin is it's kind of robust.

Ponzi scheme I think is a little reductive because in some sense all currencies are Ponzi schemes. In bitcoin, more people will believe this idea of money and the qualities that the network itself presents, that we could continue buy into it and the rest of the world will be deflated in value at the coins you yourself afforded and so you'll be well vis a vis everyone else who didn't buy into the thing.

Last point, the weakness there is that it's orthodoxy is it actually can transmit -- according to its own
protocol, which is completely delimited
and collapses all other information into the Bitcoin signal the same way national currency collapse all information into its denomination.

**Colin**: I push back against the claim that all currencies are ponzi-schemes. Bitcoin is uniquely a ponzi-scheme. It's interesting because bitcoin is really two things: it's a speculative bubble and it's a payments technology that enables regulatory arbitrage. the value of Bitcoin is that you can use it as a money on the black market and it has regulatory arbitrage value for that reason .But in order for that to be possible it requires people who are buying it in order to hold it speculatively.

But national currencies don't work like this because thier value is supported by the taxing and financing of states. dollar has value is not suspension of disbelief. It has value because that's what I need in order to pay my taxes. So there is a fundamental difference here.

**Akseli**: I really think that understanding the history and politics of money is really important, that's why we want you to be part of the project.

**Jorge**: It is in precisely credit based economy where the unit of account needs to be stable as possible, both inflation and deflation. The story we want to make,we need to shift what makes money powerful is not it appreciates but that it is stable. Where are we shifting appreciation, where we shifting volatiility, etc.

**Akseli**: They are kind of smelling to the right direction but the solution perhaps are not the smartest ones.

Now, Ben, in section 3.3, the Hayekian turn. This is where we actually start to set our agenda. So, why did we pick Hayek to start with? Can we design markets that would pursue some other goal than capitalist profitability? Could tokens be used not as a means of excahnge for most efficient trading but as unit of account, a different mode of measuring, and as a means of liquidity? Could we expand a design space beyond Hayek and his disciples? that's the agenda we have.

**Dick**: Three objectives here. I wondered whether it was too detailed. One is that in economics literature that surrounds cryptocurrencies and token economies, it seems really clear that large portion of people jump to Hayek bc Hayek makes you an instant economist. The capacities of the internet economy look on the surface as good match to Hayekian libertarian position, free markets without state. Important for us to say, there is a lot in Hayek, but there are really complex issues where you want to pose economics. Markets can't be treated as not just demand/supply. People like Posner who seem very popular as anti-capitalsit but Hayekian, this idea that the world of contractual design and markets.

Hey, what we want to get to is unstated assumptions. People who are focusing on markets can actually say that convention of free market has embeds a whole lot of assumptions that we need to pick apart.

2nd thing is we wanted an analytical point of entrt to say we want to elevate information to be a central issue in this analysis, talk about how information can be rethought in the context of a different design of economy. Hayek is the premier person who focuses on information. Conventional economics misunderstands what the role of information is. This is a way to open up a debate so that we can juxtapose our position to Hayek, there is an insight of Hayek that we can draw out of his discourse to use and reform and make way more interesting than Hayek would have ever imagined.

To get to the grammar we have to pick Hayek apart and to show why with established an established economics we can actually not just parachute in a whole new grammar but we can get there via critique.

3rd thing is we are looking for a way to introduce some of our own language and concepts. You don't want to just drop new words in, otherwise they become self-referencing. So, how do you drop the new terminology-concepts gently via a debate with something that we take to be understood, and start to turn the analytical framin around. That's probably why it is a slighlty longer section than what one would have expected from this kind of paper. It remains open to whether it is too long.

The goal here to say how can we rethink the role of information, and how can we put information front and center in the design of this new economy, and use that
as a way to get access to concepts like value and performance. Ultimately to contrast with capitalism.

**Colin**: I think the key is going to be saying is that Hayek's assumption that liquidity is not free good is not true, when you say that it becomes politics. I think really this debate about Hayek and planning and stuff I think is sort of is a little bit of a red herring.

I don't think this accomplishes how do you hack current discourse. Markets just dont do what Hayek says they do. What market is really prices ignorance, not knowledge, and that is the spread about our ignorance about whether we continue to buy/sell that commodity.

Part of the problem is that, when you ask what is liquidity, in a way that is uncertainity about whether the markets will continue to exist or not. This question that underlies liquidity doesn't exist in Hayek.

The question is does a market exist at all, and what is the price that has to be paid in order to make it to exist. That has nothing to do with the question of allocating resources efficently. It is a questiopn of wheteher we want to live in a society with one another.That is theoretical problem with Hayek.

Historical problem is all of these markets is esentially causally downstream from military requisition which has nothing to do with rationalizing supply and demand. The state has an irrational and open-ended need for military
supplies. It is that monetize the economy.

And the question it really just is the extent to which the state has to issue collateral in its money in order
to requisition military supplies. So I mean the coin has a higher nominal value than its intrinsic value, and the spread between those things is the extent to which the money is collateralized. What do I have if I have collateral in the coin: I have an option to exit from the economy and to take my gold to China and cease to be in sociality with these people I'm in the market with.

I think it is a little bit of mistake to engage Hayek in questions of rationally using resources. Really what it kind of does is allow us to have a political struggle or a social struggle without pretending that that's not what we're doing. It's a way it'll like have political
struggles over resource distribution without acknowledging that what we're doing is like fighting each other over who starves who doesn't. If all of your only goal is to manage the resource in the economy seems you could probably do with computer.

That doesn't seem to be the issue. The issue is a political question, in which differeneces is that Hayek assumes market solves a problem that has been well posed. Whereas the political question of who's worth what and who deserves what is not a well posed problem. It's a problem with any number of arbitrary solutions all of which are wrong.

**Jonathan**: That's what Dick is getting in the paper witth the orthodoxy of price.T he profit price has a
politics to it, by default politics of capitalism. And the result of that is the externalization and everything you're mentioning Colin and so much more. For domain of sociality is actually excluded

Domain of sociality is excluded from economic discourse that is solely organized by price. And that is an issue of design.It doesn't work like that from an economic discourse that takes only in terms of price, and that's

**Akseli**: This section we are able to start pointing that there are these protocols that we can understand what is actually going on.

**Dick**: We are in danger of entering a discourse that already assumes a certain set of problem, and where we postion against Hayek we are contesting on tip of iceberg, where we both already assume the existence of a society it's based around markets etc. I think for me the issue though is is the difference between an analysis that is about person positioning and one that's about persuasion.

Writing this document with crypto-economics in mind, it would just blow their minds to put the proposition that they couldn't imagine it. In writing this stuff, you want to keep the undercurrent of what you are thinking, so that these conservative people can get a hint of the point that the underlying issues that have been presumed should not be presumed. The question with this section is does it give enough flavor of the underlying fundamental issues?

Going back to the fundamental value, what we are trying to do is to say that what bitcoin showed us is that money is an asset class. Money is not the unit in which the assets are valued but in it it is itself an asset class. So, there is no income in the system, everything is simply a reflection of everything else. That's scary in certain senses but opens a lot of question about markets and money that pulls the whole thing open.

**Adam**: This discussion is really interesting. I wanted to make a small addition. I think that there are two polarities here. On one hand you could take Hayekian perspectives and say markets in the absoliute are the rational way of allocating resources. On the other you could say markets is in essence a political struggle.

I think that you can historically you can suggest that both things co-exist. There is such a thing as market sociality, that exists. Even in the political vacuum, usually those things exists on the margins. If you think about famous economic papers like cigarette trades in POW camps. Cigarretes become a market mechanism in a political vacuum. Maybe in the second moment the
choir is its hierarchy savings institutions and its rules and it's it's politics in a sense.

The problem with econonomics is that it tended to realize a particular form of sociality and generalized it to sort of social theory of markets.

Pure markets do exist but only in the margins. Most markets are politicized, and historically capitalism is precisely about that. It is about hierarchizing and politicizing markets or making markets. Taking political control off this mechanism. Braudellian like,There is everyday life and there is the higher level of political power, market, which can be capitalist or post-capitalis in some way, no guarantee what it will be democratic and participatory- autharitarian, that's also possible.

So, maybe it is important to keep the possibility that there is a space, however minimal, for markets that are very weakly politicized. Where this politization is, it is more or less participatory, egalitarian.

There is a wonderful paper called- Where do Markets Come From?-. precisely making this argument. Showing the dynamics of politization and depolitization of the markets.

**Oliviero**: I was thinking that speaking of the gap, ECSA positions itself right in the middle. Like eliminating the simplicity of price tag and trying to register and distrubte the complexity that's behind market operations. It gives the market user the ability to tell his own story, going back to the language metaphor before. You are not trying to find a narrative but give people to tell their own narrative. By choosing their own mode to value different assets and activities, they can, for the first time, open up their own markets and buy into them whoever wants to participate. I see ECSA fitting this gap.

I am very interested how you would think the technical part for this to work? Because it would be really helpful in my research, it started from cultural heritage and noting that it was always communicated with story-telling, with simple narrative. I am trying to bring to my field that complexity too, so I am waiting for the technical part.

**Akseli**: It connects very strongly with what Collin is saying. If this is possible, then really the question of liquidity comes to the front because you cannot assume markets for all these different performances and evaluations. How is that sought is the technical problem to which we are proposing a solution.

**Jorge**: this is really stretching my skillset in the political edge, but what I can support of what you sjust said is precisely is that one of the challanges how is it that you make this intangible forms, narrative forms liquid. How is it that they create their own markets, and it has to do with them picking them apart, making part of a story also part of another story, not having just one narrative, but making multiple stories coherent. I am not very fluent with this particular perspective, but basically wea re trying to do is how is the current system understood as multi agnet protocols is doing it, and how can we reconfigure them to enable the liquidity of those forms. Markets become broadband of information and exchange device.

**Dick**: In terms of the issue of the narratives, I would like to hear Ben sey about the markets and the gift. While it doesn't appear here, it has been quite an influene on us. Have simple tools to embed markets in social ways is an interesting way to open up possibilities in the future.

**Ben**: I have been listening to this conversation in kind of a fascinated way because I both like the Hayek section, because it is cleares exposition of Hayek in the minimal words you can imagine, usually people who talk about Hayek either love/hate him with excessive rhetoric. One of the things that I want to realize is that these distributed protocols and the ability to track the social in terms of quantifiable veriables or indeces that could be measured really deal with quantifiable socialibiltiy that is presupposed by modern societies, not only markets but nation states.

We discussed last meeting or so ago, the actual kind of way in which the Anderson's discussion of nationalism, which is we the people is it left out money. That was an interesting question, how does that money come back to the historical account of nation-state which was supposed to develop out of circulation of capitalist national press and novels. And then I realized is what we are actually saying is that these distributed protocols allow you to act like the interface, you can trace the interface in what money can buy and what money can't buy. That is interesting to put it because that boundary of what money can/can't buy is the boundaries of gift in modern society.

What I was trying to think about is, from all those soruces that can be exchanged in precapitalist societies, only certain ones were usually considered as money. It is not true that money comes out of barter. What you actually discover is that barter exist only at the edge of the societies, and actually has to penetrate core to the societies and transform them into the money form. Can we actually trace out that process now by allowing the quantifiability of sociality- liquidity- as the key variable?

That's the problem Hayek asserts he has solution to but he has no evidence for. It is just bunch of assertions, assertions made because he already got a free market framework which he is going to find variables into. Already presupposing the politics of market, and you really are arguing about politics of market when you make that assertion. That'what I was thinking in response to you Dick.

**Collin**: one problematic assumption is that wholesale and retail trades are qualitatively continuous.

Whoelsale trade is one thing, retail trade is really downstream from like state and warfares. States monetized the economy. Ancinet Greek became a money economy because of the Persian war. It is not a development out of wholesale trade.

**Ben**: I wanted to ask Jorge this question, whether or not bitcoin protocols could actually deal with credit. We differentiate money and credit and fundamentally relocating them, which ofc Marx didn't deal with. Whole-sale, retail, all these sorts of things all rely upon credit. And once you
build in credit from the very beginning you're nature an account of money will change.

That's what I wanted to ask Jorge, doesn't seem to me that bitcoin or etherum dont deal with credit.

that means they cant deal with liquidity, they cant deal with quantifiable sociality that is liquidity, so they cant deal with politics. All of them are ascend as differentiations within this schema.

I don't know the distributed protocols to drill hard enough into the technical things, but if that's the case, we are not tuning our horn loud enough. We are actaully rethinking credit, which rests in the idea of netting and clearing.

**Jorge**: Cryptocurrencies as they exist right now, they arent implementing credit for sure, it is just coinage. There is effort to build credit-debt instruments around cryptocurrencies, but they defer the notion of base money to the crypto currency itself. They are trying to jusxtaposition cryptocurrency as the ultimate form of of payment or a debt settlement. It's one of those strategies of trying to give value to currency.

For us, I don't know if we say it in this paper out-loud, we try to challange the notion of base money. We are basically saying that there is no need for sucha a thing in economy as basic money. Base money can become economic activity itself at the edge, that which is valuable and demanded.

Basically credit becomes just a mediation, exchange facilitation device. The advantage of this is that regulation of liqudiity happens systematically rather than centrally.

**Akseli**: I hope that we will get to the protocols and show how they will work. One thing on Hayek and on this section. Is the, which we were able to say quite well, is the index as the core/ grammar of, which Hayek uses in a narrow sense that we are trying to expand to other things.

**Jonathan**: Index and signaling.

This is my understanding of what's been said so far in relation to Hayek. Price singaling is inedex to an imperialist control of markets effectively. When one denominates in imperial currency like USD, one is exlcuding from an analysis of and presupposing the funcitonality is the securitization of these markets by hegemony.

I think one of the things that were suggesting with the network architecture which Jorge just described, there is no such thing as base money.
Sociality itself becomes the fundamental currency that can be organized through co-issuance and p2p recognition. There is many more occasions to disrupt the notion of what counts as market-securitized social form. .

By distribution agency acorss the network we are saying is that we're making all these different points of intervention which rather than disintermediate all agents on the network actually remediate, make all agents of remediation.That was a little bit abstract but I think this is one of the ways in which we're questioning the orthodoxy of price as Hayek sees it and opent that to a new kind of signaling.

**Felix**: I wanted to ask about netting. Netting is done automatically by the system, but what if it does not net? What if Outstanding positions are not closed, outstanding agents do not pay back, or give credit?

**Jorge**: so, the interesting thing about distributed netting/clearing si that really the one that is giving credit to another agent is not only the agent that serves the connection or relation itself but the whole network behind. Netting and clearing assumes act of issuance and act of counter-issuance that can cancel like debt for instance. What if someone doesn't give back what it took and economy doesn't clear? What that hints is the necessity to constrain the amount of issuance for each agent, it has to be conceived by the individual or by the netowrk as a risk position, the risk being default. The incentive is in that you do something wrong, but becuase of that your history, your reputation has to take into account of how your credit line given by the network expands/contracts. Network still has to acknowledge the default risk.

However, given that this risk is distributed means it can be priced, that has spread. Basically there is a cost embedded in systemic liquidity,we could argue actually that given the capacities of the system is actually much less of what is already a cost like that in existing systems.

**Akseli**: Last section in the chapter, which is where we open the question of derivative. Derivative treatment to Hayek, we for the first time the derivative composition.

**Dick**: Where this section gets to is the contrast with Hayek, is really to say that Hayek is presenting to us an argument that there is a trackload of information out there that informs all our decision making that funnels into markets. But the primary goal of information is to feed into price. What is fabulous allegedly about marekt mechanism is this is spontaneous. The elegence of price is complex information gets treduced to index that you can make adecision of buy/sell about it.

We wanted to say this is an interesting issue that all this information gets funneled into price. One problem is once it becomes price it cannot be reingeneered, it is lost, it is rendered irrelevant after it. In a sense, we frame price as a derivative of information, a particular exposure to information that is functional for markets to do their work.

We want to flip it. We want the derivativeness of it, but we want to flip it and say we are not interested in how info forms into prices but how prices- an act of exchange will trigger creation of information, which will be central in udnerstanding the sociality that occurs. We know that a whole lot information to be generated, which is a treasure because it tells the story of the social.

The project then is to build up narratives or what we call performances -and we'll define performances more technically at another time-that we can build up performances that give meaning to that information that occurs around acts of exchange. So we're looking to reinvent the concept of meanings and take it away from the funneling down to price which then leads to cultural aggrandizement of the market as a social interaction, and sey well, it is one particular form. We are interested multiplicity of the social realtions. We want to encode them
with meaning. The way we encode them with meaning is to dive back into the data and we encode those those datasets with meanings as performance.

To jump ahead in the story we want to count performances we want to see what patterns occur in this economy that have social meaning. Because
for us they're going to be the key to value.
The value is not about making a profit. The value is about making a social contribution. How do you recognize social contribution?

You look for activities that have been generated by
information,
you look at flows of information
and you encode them with meaning.
and that's the path you get through to thinking about a social notion of value.

So that's why really here, we want to spend some time thinking about information, price, and the derivative form because we want to see information as a derivative exposure to the social.

**Akseli**: Beautiful introduction to performance economy and indeces.

**Claire**: I love the conepts you are developing. The question that come up to me is the idea of economy as designable space feels very familiar. It feels like a familiar idea that economy is built on pre- political and social context. I wonder about why we engage with the economy, what would be the materail conditions that would incentivize the people to participate in the new economy?

The kind of propositions of how do we redesign economy is interesting but the problem is for me in the steps down the line.

I perhaps as political economist find it really think about it without a state.

**Jonathan**: What you said is super interesting. Rise of rise of what Marx called a world literature you know with the world market and versions of
world culture. And after the drive towards communication interface nad self-knowledge, which is seems to be part and parcel of a certain version of global history, as we become inreasingly connected, materially, there is a kind of an emerging collectivity. That has been expressed in the huge rise of social media, maybe in Tiktok, where people are clamoring for self-expression and self-knowledge. The problem is that form of self-knowledge has become an engine for financial accumulation which is hierarchical and pyramidal. Basically democracy has become an engine for the creation of capitalist accumulation.

I feel like the answer to your question, which is a
political question, is fundamentally about this sort of will to self-knowledge and community which I feel is widely shared even if I'm profoundly alienated where people can talk about who cares about if any one dies in the United States it is the health of the economy. I mean it's such a disconnect between people's notions of what matters. Economy up there is sort of more
alive than everybody else is and that's
the thing that matters.

And I think that the attempt to return expression to an economic substrate such that different forms of agency can manifest and persist in an economic signaling process is the drive in political innovation of ECSA.

**Ben**: there is one other example to answer Claire. Anthropology talks about the Kula ring. This is acutally a trade patterns among two dozen islands in Micronasia, spanning thosusands miles going from island to island. Two ways that things circulated, one through barter, one through valuabels exhcanged through groups. Barter was the one in which there is no trace. People could exchange it with any other. The qualitative thing with cowry shells indicated the status of the group that exchanged it, and it was qualitative and you could trace it, it had an index on it. So this is the basis of indexical tracing of a qualitative dividualism versus the barter that becomes money.

What we are tying to do is to say that you can recapture the qualitatively mediated exchanges. These cases were all to do with social liquidity of honor and status, not social liquidity of barter because it was the lowest status that engaged in barter. Highest status simply appropriated the surplus of lower groups. That relationship is actually what Jonathan is talking about, even in Kula existed as a form of exploitation, barter and qualitative exchange that we now believe can be traced. The relationship between them can be traced. Which cannot be traced of course with money, which extinguishes all the qualitative traces of all those exchanges.We are saying there are all these other things that would for instance the basis for social movements, which really all don't rely on money. They rely on maximization of other values. We think that at least in some
cases those things can be quantified and
traced and indexed. And then you can see
how any individual exchange or action contributes to that larger whole, qualitative whole.

**Jonathan**: gift as a derivative structure, because it is a contingent claim. That truly resonates with what Dick said about price being derivative of information.

If one thinks about the price of something, which suggests that the commodity that is price is actually denomination of that of that information.
So it's derivative of information is nominated in commodity X.

What we're saying is that there's a connection between the gift and the commodity here which has to do with each thing being a social form. And if we can create new social forms, effectively new denominations, what we're doing is we're multiplying spaces of expressivity within the economic network.

Akseli ends the meeting.