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It's not just name dropping, it's a very clumsy and transparent attempt at 'proof' by authority.

Which makes it look like pseudo-science.

I don't think it's asking too much of someone who's making some very bold claims to have enough of a clue to understand why this won't do.

by ThatBritGuy (thatbritguy (at) googlemail.com) on Sun Sep 23rd, 2007 at 10:46:17 AM EST
[ Parent ]

Here's a more substantive criticism. Todd envisages a system in which every transaction between any two participants is recorded. Yes, this is a good model of the economy, but that's not what accounting is about. Accounting is about each node in the network keeping track of its own transactions. What Todd wants to be is a National Accounts office that not only takes the bottom line from each node and charges them a tax, but actually keeps track of all the activity in the entire economy.

Now for a detail that hit me right off the bat:

Abolish the
(Assets) = (Liabilities) + (Owner's Equity)

equation (ALOE)

Well, according to Wikipedia,

Double-entry bookkeeping is governed by the accounting equation. At any point in time, the following (basic) equation must be true:
assets = liabilities + equity
This can be further expanded and the (extended) equation becomes:
assets = liabilities + equity + (revenue − expenses)
or
assets = liabilities + (capital − drawings) + (revenue − expenses)
A = L + C − D + R − E
Finally, the equation may be rearranged algebraically as follows:
A + E + D = L + R + C
This equation must be true, for any time period. If it is, then the accounts are said to be in balance. If the accounts are not in balance, an error has occurred.

I don't see what's wrong with that, other than the imperative

your mission, should you wish to accept it, is to maximize shareholder equity

which is not actually part of double-entry accounting but of economic theory.

Abolishing double-entry accounting because of the destructive effects of shareholder equity maximisation is like abolishing stoichiometry by blaming it for chemical warfare.

Oye, vatos, dees English sink todos mi ships, chinga sus madres, so escuche: el fleet es ahora refloated, OK? — The War Nerd

by Carrie (migeru at eurotrib dot com) on Mon Sep 24th, 2007 at 01:40:22 AM EST
[ Parent ]

I think you are missing the point: Todd doesn't want to "be" anything. He sees, from an accounting perspective, the same requirement for a generic clearing system that I see.

He sets out - among his voluminous writings - the "cloud" of "Accounts Receivable" and "Accounts Payable" which is Riegel's "Ledger of Ledgers" or the database of all obligations in the economy.

He doesn't see why:

(a) these obligations should necessarily be recorded TWICE per node - and therefore FOUR times per transaction if you consider that the seller and the buyer each make double entries in their accounting records which are a mirror image;

(b) these entries need be disconnected, with the resulting errors, need for audit, etc etc

Now the accounting universe WITHIN what I call an "Open Corporate" in which ALL stakeholders are members (suppliers, customers, and service providers) - ie encompassing a complete "enterprise" or market place - does not conform to the same accounting equation.

There is no profit and no loss within such an Open Corporate LLP or LLC, "bounded" by the "Open Corporate's" protocol which set out Aims & Objectives; who gets what in exchange for what; dispute resolution and so on.

There are only Members' accounts, and these consist of:

(a) the shared Title Registry - who "owns" or has rights of use in what (eg Land Registry, DVLC);

(b) the shared Transaction Registry (AR/AP Cloud).

If I transact with you it is either:

(a) by exchanging Value with you now - through changes of ownership within "title registries" eg debit Chris 5 land rental units, credit Migeru 5 energy units and vice versa; or

(b) by exchanging something of value in exchange for accepting your promise to exchange something in the future (ie credit). eg debit Chris 5 land rental units, credit Migeru 5 land rental units, and record ONCE an entry in the shared transaction registry that says Migeru owes Chris 5 land rental units.

This is a "peer to peer" single entry "value messaging system": there is no "profit" and no "loss" coming into it.

Settlement of Migeru's obligation then occurs through a "closing" transaction.

Now this may be through EITHER settlement in value (eg energy units) or by cancellation of the obligation, which is when I buy something on credit from someone else, who has an obligation to Migeru, and the obligation is then "netted out".

Now, I've seen this happen many times in the "real world" in the Brent 15 day market of forward oil contracts.

A sold to B sold to C sold to D who sold back to A: when the expiry date comes along this "daisy chain" does a "book out", and no actual delivery takes place.

The problem in such a system of forward obligations (which is all that money is there to facilitate) arises when someone defaults, which is why Banks evolved as credit intermediaries between Sellers and Buyers.

ie Banks "clear" transactions, and essentially perform a guarantee function thereby as a "credit intermediary" between me and you.

Todd postulates an accounting universe within which clearing "bots" or "agents" seek and net out obligations.

I postulate a Guarantee Society with a "Default Pool" of value (eg a pool of "fungible" energy units or land rental units) from which settlement will be made should a buyer default.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Mon Sep 24th, 2007 at 05:52:07 AM EST
[ Parent ]

He doesn't see why:
(a) these obligations should necessarily be recorded TWICE per node - and therefore FOUR times per transaction if you consider that the seller and the buyer each make double entries in their accounting records which are a mirror image;
(b) these entries need be disconnected, with the resulting errors, need for audit, etc etc

Because each independent entity needs to keep its own accounts for internal purposes and double-entry accounting introduces an element of redundancy that helps catch errors.

Of course, if transactions happen through the clearinghouse of an exchange, then the transaction needs to be recorded (again TWICE) by the clearing house in its own books. What you and Todd seem to want to do is abolish clearinghouse members' in-house accounting and instead have them generate their balance sheets from the clearinghouse's database. That way you reduce the number of annotations per clearinghouse transaction from SIX to TWO.

As with your Open Capital ideas, this has value for the big fish in the capital markets, but it is useless to players who are not large enough to be members of an exchange or clearinghouse.

Todd postulates an accounting universe within which clearing "bots" or "agents" seek and net out obligations.
I postulate a Guarantee Society with a "Default Pool" of value (eg a pool of "fungible" energy units or land rental units) from which settlement will be made should a buyer default.

You postulate the abolition of in-house accounting and the centralisation of everyone's accounting into a P2P system which IMHO is patent nonsense.

Disclaimer: I am not an accountant and I don't play one on TV.

Oye, vatos, dees English sink todos mi ships, chinga sus madres, so escuche: el fleet es ahora refloated, OK? — The War Nerd

by Carrie (migeru at eurotrib dot com) on Mon Sep 24th, 2007 at 07:12:53 AM EST
[ Parent ]

You postulate the abolition of in-house accounting and the centralisation of everyone's accounting into a P2P system which IMHO is patent nonsense.

"Centralisation"? I speet on eet...pttuuhh!

I advocate local "Community Partnerships" configured around what are essentially local community transaction and title registries, with local value circulating locally backed by pools of value and with credit backed by a mutual guarantee.

This works on any scale, provided the necessary trust mechanisms are built in. It's not necessary to be "large" if you are "linked-together small"

These will be, IMHO, what are to all intents and purposes, local disintermediated "Clearing Houses": with a local service provider (aka a bank, but not a bank putting capital at risk) managing the local creation of credit, and bringing local investors in land rental units etc together with investments and so on.

"Local" may then (for certain functions) choose to be be a member of "Area", may be a member of "Regional" and so on. Functions are devolved to the level best suited to carrying them out.

ie we see a "partnership of partnerships" evolving, the accounting records of which essentially constitute a "filespace". As with the Internet DNS, the only "central" requirement relates individual ID to IP address (ie "network presence").

Here I have some fairly simple but radical ideas concerning Communities as Internet "Domains" - "Dot Communities".

The fact is that fragmented "in-house" accounting is already under threat through the rise of "web accounting". I will still have my single entry - and you will still maintain your single entry, (backed up where necessary, so there is a log of changes, as with a Wiki) and when mine changes, yours changes - there can be no data entry error, although there may be disputes, and permissioning issues.

And we have not even begun to discuss Todd's point about the uselessness of accounting "snapshots" within time frames, as opposed to accounting for "flows" of value.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Mon Sep 24th, 2007 at 09:14:41 AM EST
[ Parent ]

I can sense that tying in with your local govt. dealings. Local govt. and its relationship to community projects, that kind of thing?

I know LLPs can come in all sizes bar one (or two?), but do you invisage an ideal size...I mean to have enough assets and activities to generate a daily flow of credits?

I'm wondering if you'd need a daily flow of credits for those "outside" to be able to step inside. Say I decide that it might be worth cleaning up some mucky by way--I could go to the council (or whoever) and offer to just do the work: they could offer me credits which would have value in a steady-working (daily movement) system, but not so much in a system that stays more or less unmoved from month to month (the house example.)

If there is an ideal size, what kind of group size would need to buy in do you think?

How about--and I know we're a nebulous group in some ways, but I cannae help but think we'd make a good example--the ET LLP? There is/are the server(s) to maintain; there's bandwidth to pay for; and I certainly need to be kept in the lap of luxury for typing [reads contract] two short but witty and one long but rambling comment per day, plus minimum 2 video selections...

We already have "assets" (and you said the first asset would be the indivdual and their capacities); we have daily activity.

I'm missing something(s) I'm sure I yam.

Don't fight forces, use them R. Buckminster Fuller.

by rg (leopold dot lepster at google mail dot com) on Mon Sep 24th, 2007 at 10:40:38 AM EST
[ Parent ]

It's not so much LLP's coming in optimal size as Communities being of an optimal size. Especially a "Community of Interest" like this one.

The LLP merely offers an infinitely flexible "Open" corporate framework shaped by a consensually agreed common purpose and principles of governance.

Plus, of course, the "semi-permeable membrane" of limited liability, that hopefully would serve to protect Jerome and co-conspirators from legal action by aggrieved Russian billionaires or retired Central Bankers...

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Mon Sep 24th, 2007 at 07:35:14 PM EST
[ Parent ]

http://www.jkrishnamurti.org/talks_dialogues/Krishnamurti_Anderson_1974_Dialogue1_stream

The LLP merely offers an infinitely flexible "Open" corporate framework shaped by a consensually agreed common purpose and principles of governance.

Okay, it's a tool, but what I'm thinking is: the way for most people to these new realities will be via

Do something -- receive credits -- eat, drink, be merry, heat the house, clean water on tap etc.

If the starting point is "have basic asset of value to others (e.g a house)", then I'll have to wait until I have said asset of value and then ponder (from my position of wealth) whether the LLP suits my financial needs.

But I thought you wuz talking about something wider than that, a new community relationship, and I'm wondering (maybe erroneously) how big or small the community needs to be before all the various assets (in themselves maybe not valued in the "work for money" system) combine to bring mysterious value...

And I'm thinking:

If I could walk into a community and say, "How does one live here?"

And a person from the community said, "Can you see any useful tasks that need doing?"

And I say: "Do you have a radio station?"

And they say, "Yes. Have you anything to offer them?"

And I say: "Yes! I have an old mic in my bag"

where the search is for the skill that can be offered to the community

in return for community credits (food, shelter, etc.)

and for those who have nothing at present that the community can use, there will be assistance

and an in-pouring of poor and needy people--if the laws are tolerant...

heh heh! I mean, I'm thinking of the structure of "post capitalist" social systems (kcurie!), wondering how easy we can make the transition, and how many of us can transition now, as krishnamurti had it.

K: That's why you see, sir, we have divided the physical world as the East and the West. We have divided religions, Christian religion and Hindu, Muslim, Buddhist. And we have divided the world into nationalities; the capitalist and the socialist, the communist and the other people and so on. We have divided the world, and we have divided ourselves as Christians, non-Christians, we have divided ourselves into fragments, opposing each other, so, where there is a division there is conflict.

A: Precisely.

K: I think that is a basic law.

A: Where there is a division there is conflict. But in terms of that word 'knowledge' it appears that people believe to start with that that division is there, and they operate on that radical belief.

K: That's why I am saying it's so important to understand from the beginning in our talk, in our dialogue, that the world is not different from me and that I am the world. It may sound rather, very simplified, simplistic, but it has got very deep fundamental meaning if you realise what it means, not intellectually, but inwardly, the understanding of it, therefore there is no division. The moment I say to myself, and I realise that I am the world and the world is me, I am not a Christian, nor a Hindu, nor a Buddhist - nothing, I am a human being.

A: I was just thinking when you were saying how certain kinds of philosophical analysis would approach that, and in terms of the spirit of what you have said, this really is almost a cosmic joke because on the one hand as you said, it might sound simplistic. Some would say it is, therefore we don't have to pay attention to it; others would say, well, it's probably so much in want of clarity even though it's profound that it is some kind of mysticism. And we are back and forth, with the division again, as soon as that happens.

K: I know, I have been...

A: So I do follow you.

K: So, if that is clear that human mind has divided the world in order to find its own security, which brings about its own insecurity, when one is aware of that then one must inwardly as well as outwardly deny this division, as we and they, I and you, the Indian and the European and the Communist. You cut at the very root of this division. Therefore from that arises the question, can the human mind which has been so conditioned for millennia, can that human mind which has acquired so much knowledge in so many directions, can that human mind change, bring about a regeneration in itself and be free to reincarnate now?

A: Now?

K: Now.

A: Yes.

K: That is the question.

Don't fight forces, use them R. Buckminster Fuller.

by rg (leopold dot lepster at google mail dot com) on Mon Sep 24th, 2007 at 07:53:41 PM EST
[ Parent ]

But I thought you wuz talking about something wider than that, a new community relationship, and I'm wondering (maybe erroneously) how big or small the community needs to be before all the various assets (in themselves maybe not valued in the "work for money" system) combine to bring mysterious value...

Actually, you have put your finger on it, rg, in your inimitable way.

The "Open Corporate" Community Partnerships I envisage would be the basic building block of the next iteration of Society - a decentralised, but connected, Society.

I almost posted a Diary earlier outlining and updating the "Dot Communities" concepts I evolved a few years ago and which is to be found in this

Japan 3.0

essay about five years ago while working in a seriously radical satellite company in Chelmsford (but not published on my site until Dec 2005).

Maybe I will in the morning.

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Mon Sep 24th, 2007 at 08:27:54 PM EST
[ Parent ]

aRGH! wERD FILE!

(Open office is free --should it have an LLP? In fact, what business structure does it have? Ah...questions and my wandering mind...)

I cannae explain it, but somehow people here aren't quite getting it--whatever "it" is. I think they're missing the point and the need for these new structures. I know you've written a lot on this, but what I'd like is something taken from the position of...one of us (Jerome with ET?), not just laying out the legal framework (no more wrappers! I am surrounded by quality street cast offs! ;) but maybe...hmmm...I'm intersted in the in/out flow of assets/credits. You have liquidity through timelapse...assets go in and credits move out, assets move out and credits move in, so there are enough credits and assets to offer a cushion....ach ach achooooo!

Okay, if they are the basic building blocks, why not make a building block called ET? Jerome (it's okay, he's not reading) wasn't against the idea, but he wasn't really for it. However, if these building blocks are...for building on...then if we can't build one here, does that show a limit to the model?

But no! I ask a question and don't understand the answer, so maybe imagine a new online newspaper/magazine/media outfit, high on talent and ideas but low on capitalist money cash. On the web a lot can be done for a lot less moneycash. So...the owner of this outfit has asked you to design an LLP for her...but she doesn't want all that tech. speak. She wants to know

--Why should I do it?
--What kind of structure will I be creating?
--How do assets and credits move in this system?
--No, strike that, she says, you'll start talking about wrappers...
--I know you will
--and then you'll say something involving the word corporate, and that makes me think of business meetings...

Don't fight forces, use them R. Buckminster Fuller.

by rg (leopold dot lepster at google mail dot com) on Mon Sep 24th, 2007 at 08:50:25 PM EST
[ Parent ]

She just told me to tell you that she wants you to paint a picture (just this once) rather than draw technical diagrams.

Don't fight forces, use them R. Buckminster Fuller.

by rg (leopold dot lepster at google mail dot com) on Mon Sep 24th, 2007 at 08:53:55 PM EST
[ Parent ]

Well, we have a problem here that I have no solution to, and which is applicable immediately here and in any long term community.

Let's say a number of people get together to work on a project. Input consists of contributions of differing values, by definition. Some people have more time than others, some have more creativity than others, some have nmore insight than others, some are more methodical than others, some have better contacts than others, and so on.

Each contribution is useful.

Some contributions may be essential.

It may not be obvious which is which. A chance remark from someone on the periphery can turn out to be the key to success.

Let's say the project is successful and income appears.

How should the income be distributed?

by ThatBritGuy (thatbritguy (at) googlemail.com) on Mon Sep 24th, 2007 at 09:02:43 PM EST
[ Parent ]

Like today ... arbitrarily ... (none / 1)

... but in an arbitrary method that is accepted by most as more or less legitimate.

I've been accused of being a Marxist, yet while Harpo's my favourite, it's Groucho I'm always quoting. Odd, that.

by BruceMcF (agila61 at netscape dot net) on Mon Sep 24th, 2007 at 11:38:06 PM EST
[ Parent ]

Everyone votes what proportion of the proceeds everyone else but themselves should receive.

Oye, vatos, dees English sink todos mi ships, chinga sus madres, so escuche: el fleet es ahora refloated, OK? — The War Nerd

by Carrie (migeru at eurotrib dot com) on Tue Sep 25th, 2007 at 01:29:16 AM EST
[ Parent ]

Then how do you prevent cliques that have grown up during the project and have become convinced that their groups input was the most valuable from monopolising the credit/income?

Any idiot can face a crisis - it's day to day living that wears you out.

by ceebs (ceebs (at) eurotrib (dot) com) on Tue Sep 25th, 2007 at 03:16:28 AM EST
[ Parent ]

Because they only get a proportional share of the income to distribute as they see fit.

Oye, vatos, dees English sink todos mi ships, chinga sus madres, so escuche: el fleet es ahora refloated, OK? — The War Nerd

by Carrie (migeru at eurotrib dot com) on Tue Sep 25th, 2007 at 03:24:20 AM EST
[ Parent ]

Who defines the proportion?

Also, what happens if there's no agreement, or the voted distribution doesn't add up?

by ThatBritGuy (thatbritguy (at) googlemail.com) on Tue Sep 25th, 2007 at 07:08:54 AM EST
[ Parent ]

Do I need to pull a diary on fair distribution out of my arse, now?

You have N people - you give each of them 1/N of the total to distribute as they see fit among the other N-1 people excluding themselves.

Each person then gets some assigned fraction of the total.

One can allow for different subjective valuations and payments in kind as well by means of an auction which guarantees everyone gets at least their subjective eveluation of what constitutes their share.

Oye, vatos, dees English sink todos mi ships, chinga sus madres, so escuche: el fleet es ahora refloated, OK? — The War Nerd

by Carrie (migeru at eurotrib dot com) on Tue Sep 25th, 2007 at 11:57:56 AM EST
[ Parent ]

Could we have this as a Diary, rg?

"The future is already here -- it's just not very evenly distributed" William Gibson

by ChrisCook (cojockathotmaildotcom) on Tue Sep 25th, 2007 at 04:14:58 AM EST
[ Parent ]