Time, Value, and the Answer - Part 3

TIME, VALUE, AND THE ANSWER

Bob Fiske
May, 2009

 (Continued from "Time, Value, and the Answer - Part 2")

PART 3: THE END OF CURRENCY

I see a role for technology in this sweeping vision of assigning VALUE to human activities.  Many activities involve material goods.  In these transactions, there already exist capitalistic and accounting methods to equate these goods to monetary value.  In many cases "market factors" are largely responsible for the adjustment of value.

For instance, a company that wishes to increase market share for its product could attempt to manipulate the market by lowering price or creating other buying incentives.

Here are some examples:  the cell phone company that offers a "family deal" of getting 4 cell phones for the price of 1.  Or the innovative pizza store manager (Anita) who sold mugs of beer for 25 cents from 2 to 5pm on weekdays.  (This was so successful at drawing in customers that the purchase of food exceeded the peak lunch-hour times.)

In the service sector, however, the valuation of non-material (time based) activities can be difficult to establish.  There are groups of people that are attempting to pioneer an alternative to money-based valuation as a means of conducting business.  These are barter-based movements in which goods and services are exchanged directly without using the intermediate convention of money-based value.

Here are some links to explore:

Barter

Overview article about the method of exchanging goods or services directly without using currency.  Barter can be an alternative form of conducting commerce in extreme situations (hyperinflation, deflation, frozen currency flow).

http://en.wikipedia.org/wiki/Barter

Local exchange trading systems (LETS)

A non-currency-based credit system in which people swap skills or “favors”.  These systems are developed locally among people in a geographic situation who want to conduct trade among themselves.

http://en.wikipedia.org/wiki/Local_Exchange_Trading_System

The LETSystem Design Manual

This is of historical interest since it dates back to the mid- to late 1990s.  This online manual documents the fine points of users in Canada and the U.K. who were setting up and participating in local exchange trading systems.

http://www.gmlets.u-net.com/design/home.html

Gift economies.

This is a fascinating overview of non-market-driven economic systems based up giving without an expectation of receiving in return.  Often, the non-monetary societies organized this way viewed “gifting” as an ongoing activity in which to stop the flow of giving resulted in social disapproval.  Article reviewers have faulted this exposition for its many un-referenced statement, unfortunately.

http://en.wikipedia.org/wiki/Gift_economics

BarterQuest.com

A commercial, online bartering database/network founded by Dr. Paul Bocheck and Michael Satz.

http://www.barterquest.com/

Swap.com

A widely used swapping web site where people can post “wants” and “haves” and form trades.

http://market.swap.com/

Craigslist bartering

A crude barter system where people can post ads about something they have and something they want in exchange for it.

For example: http://orangecounty.craigslist.org/bar/

Time banking

A system of commerce using time as the currency.  In this system services are exchanged, rather than goods.

http://en.wikipedia.org/wiki/Time_banking

Examples of time bank web sites

California Federation of Time Banks

http://cafederationoftimebanks.com/action/learn-about-time-banking/

Long Beach Time Exchange

http://timeexchangelb.wordpress.com/

Orange County Time Bank

http://www.octimebank.webs.com/

Time, Value, and the Answer - Part 2

TIME, VALUE, AND THE ANSWER

Bob Fiske

May, 2009

(Continued from "Time, Value, and the Answer - Part 1")

PART 2: TIME

One area in which current account methods are inadequate regards time.  There are two ways in which time is accounted for.

First, time can be converted into monetary units, such as when a person works for an hourly wage.  If you work 10 hours for a wage of $10/hr., then the value of your time will be converted into $100.  A corollary of this is "piecework" in which the accomplishment of a specified unit of work is exchanged for an agreed upon equivalent amount of money.  Thus, many salespeople work on commission in which each completed sale earns them a fee or percentage of the sale.  Somewhat related to this is the "bonus", in which an employer rewards a "dependent" for overall exemplary work practices.

The other method is the "deadline".  Accomplishing a set amount of work by an agreed-upon mark on a timeline is valued as good and can result in "reward".  Missing the deadline is negatively valued and is usually associated with some penalty.

Much of what the contemporary culture values is built around these two time valuation methods.  Yet, this conversion to money fails to account for many qualities of time that have value.

Here are some examples.  The amount of time that a person spends on restoration or spiritual reconnection.  The amount of time a person spends learning about his/her inner psyche.  The amount of time a person spends on setting personal goals and evaluating satisfaction about the direction of her/his life.  The amount of time spent in appreciation of moments of good fortune.  The amount of time a parent spends shaping the lives of his/her child(ren).

So, once again I imagine an alternative time accounting system that includes both the "tangible time" activities (convertible to money), as well as the "intangible time" activities.  The question revolves around this fact: clearly, intangible time has value.  However, in a capitalistic system that rewards tangible time, tangible objects and monetary value, the satisfaction derived from intangible time activities is placed into competition with tangible time activities.

For example, if a person values physical fitness, she/he must do these sorts of activities on her/his "own time".  Because intangible time is "devalued" in the money-driven capitalistic system people's behavior can be shaped in the direction of ignoring these activities.  Over time, this will lead many people into a psychologically (and perhaps also physically) unbalanced state.  Thus, it is possible that certain states of health and disease might be related to the skewed value system of money-oriented time.

Suppose there were, in this new system, a comparison of tangible time activities to intangible time activities.  Perhaps this would result in in "tradeoff tables".  These tables would show the equivalence of tangible time for a given activity to the amount of time devoted to an intangible activity.  This is perhaps similar to the foreign exchange market in which a "dense" currency, such as the Euro, is rated against a "light" currency, such as the Mexican peso.  In this relative valuation, a single unit of dense currency can "buy" many units of light currency, while a single unit of light currency will "buy" a small fraction of a single unit of the dense currency.

So, by way of example, the tradeoff table might show that an hour of physical therapy for a back injury would be dense compared to an hour of work time.  At the same time, an hour of taking one's children to a movie might be light in the tradeoff table compared with visiting one's parents.  In this new accounting system, different "time currencies" could be literally traded.  Thus, visiting one's ailing elderly parent could actually offset a portion of one's tangible work time.

This is clearly a departure from the existing capitalistic time accounting system.  It represents a MAJOR SHIFT IN VALUES.  The current system would regard as crazy the proposition that an employee should be paid a fraction of a work hour's value for visiting an ailing parent.  The closest the current system comes to this is that some employers give a certain number of flex hours per year that workers can use, at their option, for time-off activities.  This, however, is a far cry from the sweeping tradeoff table for ALL tangible and intangible time activities.

(To be continued...)

Time, Value, and the Answer - Part 1

TIME, VALUE, AND THE ANSWER

Bob Fiske

May, 2009

PART 1: VALUE

Modern civilization has advanced the methods of accounting practically to a science.  The most developed accounting system we have concerns itself with money.  The simple view of financial accounting is based on the basic accounting formula

Assets = Equity + Liability

Each of these broad categories are typically broken down into finer and finer types.  (I call these "flavors of money".  Here is a little lecture I gave about financial accounting: accounting basics.)

Businesses are modeled on monetary accounting simply because this is a value that CAN be measured easily and accurately.  In this regard financial accounting is quite successful.

Financial accounting is formulated as a double-entry system in which monetary value is transferred between accounts.  When this happens, one account is debited while the second account is credited.  This system maintains balance and accuracy.  The monetary value of the debit equals that of the credit.  The sum total of the plus values equals that of the minus values.

An example from financial accounting is when I use an account representing one type of asset—“cash” ( in other words, liquid capital)—to buy items of another type of asset—goods to be re-sold.  The value of the asset account (e.g., a shoelace multi-pack crate) increases, while that of the first (cash) decreases a like amount.  Adding across the two sets of accounts produce a net change of zero, since the credit and debit values cancel each other out.

Given this, one might wonder how any company could produce a profit and stay in business?  Changes to the overall value of a business happen in primarily three ways.  First is the action called "markup".  In other words, I "buy cheap and sell dear"—what my customers buy must cost them more than it cost me to procure it.  Second, businesses pay out to cover their expenses.  When this loss is less than revenue from selling, the business posts a profit.  Third, there are payouts a business makes that are not balanced by receiving a reciprocal value in exchange.  Two examples are taxes and interest paid on loans.  Again, these losses must not dominate revenue if the business is to become profitable over the long term.

A broad rethinking of accounting systems would question the premises and ask, What's missing?  When we focus upon values for which there exist no common currency, then we must admit that we lack a method of accounting precisely because many value systems don't lend themselves to systematic numerical measurement.

What is the value of a hug?  How about a pet dog?  What is the value of the security of knowing you won't lose your job?  What is the value of dying without any regrets?  Can you measure the love between two people?  Can you put a number on the concern that all life on this planet might be threatened?

This opens the possibility that there are many types of value that color and flavor the "quality of life".  Imagine, then, how it would look to have an accounting system for these hard-to-quantify values that is of similar sophistication as the financial accounting system that is the mainstay of the capitalistic system.

So, imagine an accounting system (however crude) in which we could include and track the value of something as intangible as a hug?  We start by assuming that something is received as well as given.  For instance, what I give is a gesture of support and caring.  The value I receive is the pleasure that it gives me to hug and feel hugged back or the value of knowing that I helped somebody feel good.

Without, at this time, being able to specify how it is done, we will imagine that an intangible accounting system is possible.  In this system, it will be possible to evaluate items of value, assign a number to them, and balance the giving against the receiving.

In the case of money, the measurement system is “mathematically strong”.  It is what is called a ratio scale.  For example, it is always true that ten $1 items are worth ten times the value one $1 item.

The assigning of numeric value to intangible things such as hugs or security might require a weaker measurement scale than the ratio-capable scale that monetary value allows.

This is in the province of measurement theory.  In non-ratio scales it is not always true that ten 1-unit things have ten times the value of a single 1-unit thing.  After all, how many hugs can a person receive?  It becomes tiresome to receive hug after hug after hug.  The value of the tenth hug could be substantially less than the value of the first hug.

Nevertheless, this new currency would need to establish “value equivalencies” between one kind of intangible thing and another.  This could make it possible to conduct trades, even if the measurement scale is only approximate.  More on this, later.