This is in a pretty rough state, all feedback welcome, especially feedback on the overall structure and how it compares to v1 and v1.1.
“Unrelated” Hard Problems
Collectively, we are facing some difficult challenges.
Our health care systems are unsustainably expensive, with a focus on expensive drugs and interventions, not on healthy outcomes
The rewards in our society are skewed, with some people (like public school teachers) getting receiving pittances for valuable work, while others (like investment bankers) earn princely rewards for dubious work
We are destorying natural ecosystems at an astonishing rate, and unsustainably changing the planet’s climate
At first glance, these problems seem unrelated; we believe they require independent solutions. So we try to fix them piecemeal: a new financial regulation here, a drug pricing reform there, and maybe even a carbon tax. Unfortunately, these solutions don’t work very well; their good intentions are regularly stymied by the system.
The Deeper Issue: Maximizing Wealth
I believe these issues are all symptoms of a deeper, systemic problem. The problem is embedded at the core of our economic paradigm? we are focused on maximizing financial wealth.
Financial wealth is oriented around ownership and transactions. The two go hand in hand: if I own something, I can sell it outright, or sell access to it. Either way, my wealth goes up.
This paradigm worked well during the industrial revolution–it was very good at organizing us to produce physical things, like cars, couches, and iPhones. So now we all own lots of cool toys. That’s great. However, we run into serious problems when dealing with values that can’t be owned or transacted.
- We can’t own health, or sell it. However, we can transact in drugs and surgeries.
So our system orients on maximizing the total price of medical interventions, rather than maximizing healthy outcomes.
- Public school teachers don’t own the flourishing of their pupils, and lessons aren’t sold a-la-carte. Investment bankers, however, directly get a cut of the massive transactions they initiate.
The result is that we over-pay people who are close to financial transactions, but underpay for other forms of vital value.
- No one owns global biodiversity. A forest’s role in sustaining keystone species, or pulling carbon from the atmosphere, produces no transactions–but cutting it down for lumber produces commodity value.
The result is that we myopically exploit the natural world for resources, rather than stewarding the wilderness to sustain our ecology.
If we are to solve these problems at their root, we need a fundamental change. We need an economic paradigm shift around how we recognize and reward the creation of value.
Fortunately, there’s good reason to believe we’re ripe for an economic paradigm shift. Capitalism, as currently incarnated, evolved to solve the needs of the 20th century: coordinating massive industrial processes around the extraction and production of physical resources. And it did so using the best 20th century information technology: pen, paper, and office sized mainframes.
Today, economic value is increasingly unlocked from creativity and intangible assets. At the same time, we’ve developed incredible new tools and approaches for organizing, processing, and coming to consensus on information.
Cred: An Alternate Paradigm
SourceCred’s core idea is that we can switch from an economic system based on wealth to one based on cred. Cred is a reputational metric that recongizes how someone or something has contributed value to a community.
Like money, cred flows between participants. However, there are two key differences:
Synchronous vs Asynchronous
- Monetary transactions are evaluated upfront (synchronously). At the start of a transaction, you guess how much something will be worth, and exchange money based on that guess.
- Cred flows are evaluated retroactively (asynchronously). Cred flows are always updating to reflect our best understanding about which contributions added value.
Fungible vs Non-fungible
- Money is fungible and transferrable, meaning its history is perpetually being erased. A dollar earned from selling conflict diamonds spends just as well as a dollar earned any other way.
- Cred is non-fungible and is specific to an individual community and contribution. Cred earned for helping develop SourceCred is qualitatively different from cred earned by helping protect an ecosystem.
Cred, as applied to Hard Problems
- Every person’s “health cred” flows to the people, institutions, or interventions that contribute to their health. For example, someone who starts a popular bicycling club would recieve some “health cred” from every person who participates.
- Public school teachers would recieve cred in all of their students – retroactively updating based on the students’ long-term assessments of how influential the teacher was. Teachers with many flourishing students would recieve a lot of cred.
- Investment bankers would get cred too – if the transactions they organized actually created value. On the other hand, those who championed bad deals would eventually recieve little cred (or negacred)
- The forest would be a nexus of cred–recieving cred from surrounding communities, from species that reside in it, and from the ecosphere as a whole. It would then flow cred to all the instutitions, entities, or natural processes that sustain the health of the forest.
On the Implausibility of New Paradigms
Described outright, Cred seems fantastical. There are a lot of hard questions we’d need to answer in order for the system to work. We need frameworks for fairly dividing cred–frameworks that don’t yet exist. Taking the example of “ForestCred”–who would determine how the forest flows its cred? Wouldn’t corrupt interests try to hijack the cred flows, without actually stewarding the forest?
However: every new paradigm seems absurd at its onset. Consider the history of the industrial revolution. The internal combustion engine was invented in the 1790’s, but the idea that they would one-day be the basis for almost all transportation would have seemed absurd. Deploying engines–in cars, trains, and airplanes–required massive technological advances, and generations of investment in infrastructure like highways, airports, and oil processing.
Finding a Niche
Every new technological or economic paradigm starts out at a massive disadvantage, because it is immature, and its competitors are established in technology, regulations, and human expectation. What the new paradigm needs to thrive is a niche: some environment where the new approach can outcompete the old; someplace where the new paradigm has a home-turf advantage.
For the industrial revolution, the niche was coal mines. Coal was needed for an old-world purpose (heating London in the winter) but was the ideal proving ground for new-world technologies. Even a very inefficient steam engine can be competitive–if it’s used for pumping water out of coal mines, since the coal is already on-site and nearly free. Similarly, an inefficient steam-powered locomotive can still thrive if its job is transporting coal away from the mine.
Open-Source: SourceCred’s Niche
Today, the ideal niche for deploying a new economic paradigm is open source software. The open-source movement has rejected the concept of ownership, and as such the capitalist paradigm can’t apply: there’s no assets to invest in, no access to restrict, no transactions to price. As such, many people working in open-source go entirely unrewarded, moonlighting as a labor of love. Despite the lack of recognition, open-source software is phenomenally valuable: today, almost all of the world’s commercial software is built on top of open-source languages, libraries, and frameworks.
While open-source is poorly suited for capitalism, it’s ideally positioned as an early adopter for cred. Part of the premise of SourceCred is that we can use more data about contributions in order to flow value properly; SourceCred can track every single comment, code change, or bug report, and flow cred to the authors. Open-source development leaves a uniquely rich digital footprint that we can use to jump-start cred analysis. Furthermore, open-source contributors are tech-savvy early adopters, and are actively searching for new economic models to sustain open-source.
SourceCred’s near-term plan is to prototype an economic paradigm shift by focusing on open-source economics. We want to build an economic network that will reward all the contributors and backers of open-source software, flowing cred within projects and across project boundaries.
We’re focused first on dogfooding SourceCred on itself. We are already computing cred-in-SourceCred, and every week we distribute “Grain”–a digital token representing support of the project–based on SourceCred’s own cred. Contributors can then sell Grain for dollars, providing a bridge between the new world of cred, and the old world in which we all need to pay rent.
We hope for this experiment to be the “seed crystal” that starts the long process towards deploying a new paradigm. In the coming years, we expect to extend the experiment to open-source projects in the cryptosphere, then to open-source projects in general, and then beyond.
Thanks to @flyingzumwalt, as the direction taken in this draft was inspired by a 1:1 conversation we had.