Metrics, Stocks, Shares, and Secure Ledger Accounts for Living Capital: Getting the Information into the Hands of Individual Decision Makers

Individual investments in, and returns from, shares of various kinds of human, social, and natural capital stocks will be tracked in secure online accounting ledgers, often referred to generically using the Blockchain brand name. A largely unasked and unanswered question is just what kind of data would best be tracked in secure ledgers. To be meaningful, entries in such accounts will have to stand for something real in the world that is represented in a common language interpretable to anyone capable of reading the relevant signs and symbols. Since we are talking about amounts of things that vary, measurement will unavoidably be a factor.

High quality measurement is essential to the manageability and profitability of investments of all kinds, whether in manufactured capital and property, or in literacy, numeracy, mental and physical health, sociability, and environmental quality (human, social, and natural capital). The measurability and manageability of these intangible factors has achieved significant levels of scientific precision and rigor over the last 90 and more years.

This development is of increasing interest to economists and accountants who have long envisioned ways of reinventing capitalism that do not assume the only alternative is some form of socialism or communism (see references listed below). Many of today’s economic problems may follow from capitalism’s incompleteness. More specifically, we may be suffering from the way in which manufactured capital alone has been been brought to life, economically speaking, while human, social, and natural capital have not (Fisher, 2002, 2007, 2009a/b, 2010a/b, 2011a/b, 2012ab, 2014, etc.).

One in particular who speaks directly to an essential issue that must be addressed in creating an economy of authentic wealth and genuine productivity is Paul Hawken (2007, pp. 21-22), who says that Friedrich Hayek foresaw

“a remedy for the basic expression of the totalitarian impulse: ensuring that information and the right to make decisions are co-located. To achieve this, one can either move the information to the decision makers, or move decision making rights to the information. The movement strives to do both. The earth’s problems are everyone’s problems, and what modern technology and the movement can achieve together is to distribute problem solving tools.”

Hayek (1945, 1948, 1988; Frantz & Leeson, 2013) is well known for his focus on a distinction between a mechanical definition of individuals as uniform and homogenous, and a more vital sense of economic “true individuals” as complex and interdependent. To create efficient markets for the production of authentic wealth, we need to figure out how to extend the “true individuals” of manufactured capital markets into new markets for human, social, and natural capital (Fisher, 2014).

The distributed problem solving tools we need to support the decision making of “true” individuals are secure online ledgers accounting for investments in measured amounts of authentic wealth. Efficient markets are functions of individual processes that create wholes greater than their sums. The multiplier effect that makes this possible depends on transparent communication. Words, including number words, have to mean something specific and distinct. This is where the value of systematic measurement and metrology comes to bear. This is why we need an Intangible Assets Metric System.

For as long as economists have been concerned with markets, philosophers have been pointing out that society is an effect of shared symbol systems. In both cases, economists and philosophers are focused on the fact that it is only when people have a common language that an idea, a meme, can go viral, that a market can seem to have a mind of its own, and science can maintain an ever-increasing pace of technical innovation.

Our aim is to create the information that will populate the entries in the secure ledger accounts people use to track and manage their investments in literacy, numeracy, health, social, and natural capital. These entries will be posted right alongside their existing entries for investments in manufactured capital and property, which includes everything from groceries to autos to electronics to homes.

But the new ledger accounts will be different from today’s in important ways. Many current accounting entries are ultimately written off as costs producing untracked and unaccountable returns. We simply spend the money on groceries or school tuition or a doctor visit. The income is logged, and so are the expenses. We can see that, yes, buying groceries is an investment of a kind, since we profit from it by enjoying the processes of cooking, sharing, and eating tasty food, by avoiding hunger, and by sustaining good health.

Investments are tracked in a different way, though. Money is not just spent and kissed goodbye. Instead, investment funds are loaned to or leased by someone else who is expected to be able to increase the value of those funds. There are often no guarantees of an increase, but the invested value is associated with a proportionate share in the total value of the business. As the business grows or fails, so does the investment.

In much the same way, if we had the information available to us, we could track the returns on the investments we make in food, education, or health care. If we track the impacts of our dietary choices, we would be able to see if and when the investments we make result in healthy outcomes. The information brought to bear will have to include systematic advice relevant to one’s age, sex, pre-existing conditions, genetic propensities, etc. Additional information on the returns on one’s investments in a healthy diet should also be made available, as might be found in the expected income or expenses associated with the consequences of what is eaten, and how much of it. Sometimes there will be room for improvement, for example, if the foods we eat are too sugary or fatty, or if we eat too much. Other times, maintaining a healthy, varied diet may be all that is needed to see a consistent positive return on investment.

Public reports will allow us all to learn from one another. The ability to communicate in a common language and to see what has worked for others will enable everyone to experiment with new ways of doing things. People with common food interests or problems, for instance, will be able quickly evaluate the relevance and benefits of other people’s approaches or solutions. Because of the ways in which communication and community go together, it may be reasonable to hope that new levels of innovation, diversity, tolerance, and respect will follow.

Many aspects of work, education and health care are already undergoing transformations that move their processes out of the usual office, school and hospital environments. These changes will be accelerated as distributed network effects take hold in each of these various markets.

It is easy to see how the Internet of things may evolve to be the medium in which we manage relationships of all kinds, from education and school to health and safety to work and career. Secure ledgers immune from hacking will be essential. And an important health factor will be to know how much relationship management is enough, and when it’s time to get out into the world. That balancing factor will be a key aspect of a successful approach to connecting information on authentic wealth with the individual decision makers growing it and living it.

References

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