The point that Jake is missing is that in a networked P2P economy there will be no double-entry book keeping and there will be no Profit and Loss; there will be no dated debt and no possibility of default; there will be no (intermediary-issued) money paid for the use of money; and intermediaries will transition to service provision, thereby minimising the finance capital they need.

There will instead be shared transaction and title registries; shared risk and shared surplus. The risk for an investor - as it is with any form of equity, is the absence of any return.....except that in the case of equity-as-undated-credit (as opposed to the sociopathic 'divine right of capital' equity in a Corporation) the word 'return' refers to redemption of credit against value received.

'Peer to Peer' credit will be cleared within a suitable framework agreement of trust.

'Peer to Asset' credit will be a 21st century form of the Stock which has been airbrushed from economic history for hundreds of years since sovereign credit was first privatised in 1694.

This dis-intermediation is already taking place because 'it works' for the banks who have suckered risk averse investors into commodity and equity markets.

Once these bubbles collapse, then I believe we will move to the adjacent possible - as above - and capitalism as we know it will devour itself and emerge in a non-toxic form.

This will happen is because it is simply inefficient to pay a return to someone for nothing if you do not have to.....and those businesses who do not pay rentiers will be at a competitive advantage to those who do.

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

conservation

freudian typo dept... ;)

'The history of public debt is full of irony. It rarely follows our ideas of order and justice.' Thomas Piketty

This is only true if you believe in the conservation of money.

No, it is true as long as economic actors are averse to risk and uncertainty.

Going back to an earlier conservation, money is a decision-making process, not a thing. It's one - extremely poor and rather stupid - way to decide how to steer policy and values.

With a mature social structure, neither 'loss' nor 'debt' have anything useful to contribute as policy concepts. You can certainly have 'mistakes' and 'things that didn't work for some reason' - but you'll always have those.

That may be, but what Chris is proposing is not such a social structure. It's just a return to a more primitive form of money. We tried private money in the 19th century. It was abandoned for a number of unimpeachable reasons.

Critically the concept of loss does nothing to keep them from happening.

That is not the point of considering how losses propagate through the economy. The point of considering the propagation of losses is that people tend to want to protect themselves from losses. For, again, a variety of mostly unimpeachable reasons.

If you have an all-equity financial network, of the sort Chris proposes here, it becomes impossible to protect yourself from the fallout from other people's failures. People don't like eating the fallout from failures they had no part in making.

You may argue that this is a silly attitude, that people should realise that we're all in this game together and support rational collective planning. And that may be a perfectly sound idea. But people will none the less deploy considerable ingenuity towards protecting themselves from the negative consequences of what they perceive as other people's mistakes.

- Jake

Friends come and go. Enemies accumulate.