Tuesday, August 27, 2013

A Wealth of Exchanges. A New Paradigm for Prosperity As Choices, and the Ability to Choose.

This is another in a series of posts that build on things I have learned from Art Bardige.

This time, the focus is on a powerful cognitive construct of Unique Artifacts.

A difficult construct to appreciate within the current orthodoxy of corporate capitalism, I offer Unique Artifacts as the foundation of a new economic orthodoxy of prosperity defined as a wealth of choices, and the ability to choose. 

The full story of the paradigm shift to this new paradigm of choice, and the ability to choose, can be summarized as follows:
  1. That Which Is Chosen: Unique Artifacts
  2. Those Who Do the Choosing: People With Needs, and Money
  3. Enterprise as the Nexus between Chooser and Chosen
  4. Change and Changing Choices 
  5. Investment as Anticipating Choice, and Changing Choices
  6. Aggregating Savings to Fund Investment
  7. The Conundrum of Corporate Savings
  8. The Invention of Stewardship Savings
  9. Putting New Wine Into Old Skins
  10. Empowering a Direct Connection Between Capital and Wealth Creation
In this blog post, I write about the first three chapters in this story.

That Which Is Chosen: Unique Artifacts. 

For Art Bardige, and his philosophy of knowledge, artifacts are human constructions in their most generic form, the work of human hands, whether that is a drawing, a carving, an utterance, a tone, a poem, a writing, a crop, a building, a tool, a decoration, an idea, and so on.

Uniqueness means singular, and special. The opposite of random. For Art, singular means individual, and distinct. Special means that it resonates with meaning and truth.

As a philosopher of knowledge, Art paints with a very big brush, on a very big canvas.

I write here as a philosopher as well, but a philosopher of economics and prosperity. This, too, is big, but not as big as all of how we know and how we learn.

When I take Art’s insight into Unique Artifacts and apply it in the more narrow context of economics, it becomes three things: singular, special and surplus. Singular comes to mean physically capable of being granted to some and denied to others, such that it can be transferred for a price, in an exchange. Special means that its possession and use has value to others, such that they are willing to pay a price to acquire the rights to its possession and use. Surplus means there is more than is needed by the people who made it to satisfy their own needs, so that they are willing to transfer some to others, in exchange for a price.

The price may be paid in money, or in other artifacts of value. We will abstract for present purposes from the possibility of completing exchange through barter, to focus only on exchanges completed for money, because the use of money empowers an open-ended network of exchanges that supports an equally open-ended portfolio of artifacts for exchange to form a robust, resilient and regenerative economy that evolves through change and adaptation to change.

Those Who Do The Choosing: People With Needs, And Money

Taking the exchange of unique artifacts as the fundamental process of economy reveals that the size of the economy is a function of the volume of exchanges that can and do take place at any given time and over time. 

This, in turn, is a function of two things. One is the volume and variety of artifacts available for exchange. The other is the number of people able and willing to participate in the regular and recurring exchange of artifacts for a price paid in money as the measure of wealth previously created through participation in prior exchanges.

Can you feel the paradigm shifting?

In the current orthodoxy, prosperity is about scale, about production and about perpetual growth in the scale of production.

In our evolving, new orthodoxy, prosperity is about maintaining a wealth of choices, and an equivalent ability to choose, within a network of exchanges that convert surpluses from waste to wealth.

The current orthodoxy focuses on production, and assumes wealth creation will follow as a matter of course. The new orthodoxy focuses on wealth creation, and manages production accordingly. Since wealth is measured in money, this becomes a true Copernican Revolution in our paradigm for prosperity, from production-centered to monetization-centered.

This changes our theory of enterprise. That changes our theories of investment.

Enteprise: The Nexus Between Chooser and Chosen

Wealth is created through exchange. Exchange requires surplus. Surplus is created through work: a concentration of time and effort that results in more artifacts than those who construct those artifacts can use to meet their own needs. Surplus that cannot be stored is waste, unless it can be monetized through exchange. Enterprise is the vehicle for monetizing surpluses, and transforming waste into wealth.

The integrity and authenticity of enterprise is a function of the completeness and cohesiveness of its:
  • knowledge of the patterns to apply in constructing a surplus of artifacts, and converting that surplus into wealth through exchange with others;
  • networks of connections to all the different participants in the monetization process, including suppliers of consumables, suppliers of durables, suppliers of capital, suppliers of time, effort and expertise and the customers who, through repeated and recurring exchanges, supply the revenues that reward the efforts of all, and keep the enterprise robust, resilient and regenerative; and
  • routines for effectively and efficiently constructing and re-constructing the surpluses that are exchanged to generate the revenues that get the whole thing going and keep it flowing.

The scale and longevity of enterprise, and so its value for investment, however, is a function of the popularity of its artifacts, as this popularity changes over time, as circumstances change, and new choices become available.

This will be the topic of my next post.

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