The use of 0s and 1s is interesting. If you look at for example software transactional processing (specifically the two-phase commit), the nature of doing a transfer from one account to another follows this 0/1 metaphor. This is easiest seen on say smart card or phone money.

Say Alice has 100 euros on her smart card, and wishes to connect up to Bob and transfer a few to him. The euros exist on her smart card at the beginning; this is 10.

At the end Bob has the euros transferred, and this becomes 01. But in between we must pass through either of the 00 or 11 states.

This is because, according to information theory, no two actions can be done at the same time. So systems (including Alice & Bob's smartcards) must choose to either do the addition to Bob first, or the deduction from Alice first.

Typically what happens is that engineers find themselves adding to Bob first - so the transaction goes 10 ⇒ 11 ⇒ 01. This allows for money to be created, as, in the instant between adding and subsequent deduction, there is money on both platforms. A cunning attacker can turn off Alice's platform before she's debitted. Money is created, and this system typically does not survive when attackers figure out the weakness.

Engineers then switch to the alternate path is to deduct Alice first -- 00 state. This then means that if the transaction breaks as it goes from 10 ⇒ 00 ⇒ 01, the money disappears, leaving a support problem for the operators. But this is more tractable.

As an aside, I think a challenge remains here to come up with the right metaphor for displaying the concepts. I for one find the left-handed / right-handed metaphor unintuitive (and I never groked the electrical engineers' left- and right-handed rules).

In contrast, I like the economists' favoured metaphor of a 2 by 2 matrix:

Is there a paper I can read before I start babbling offer constructive criticism?

She believed in nothing; only her skepticism kept her from being an atheist. -- Jean-Paul Sartre

Martin is essentially pointing out that there are in fact four economic states:

Mine: Not Yours (10);
Yours: Not Mine (01);
Both Mine And Yours (11);
Neither Mine Nor Yours (00).

It's really quite deep: by 'resolving zero' we see that there are two aspects of the Zero state, not a million miles away from two different directions to particle 'spin'.

The single entry tally stick is 1-Dimensional: current double-entry accounting is 2-Dimensional: and Martin Hay posits 3-Dimensional (triple entry) accounting.

Alternative to Money - Example 2 | chiralkine.com

Alternative to Money - Example 2

Person A has apples, but eats bread; Person B has meat, but eats apples, and Person C has bread, but eats meat. They have no means of exchange. The bank lends a food trading token to Person A. It charges interest in food on the loan. It requires Person A to return the token with a slice of bread. The Government also levies a tax on each trade, payable in food. It will tax Person A two slices of bread for buying bread, Person B two slices of apple for buying apples and Person C two slices of meat for buying meat. Person A now buys bread from Person C using the token, then Person C buys meat from person B, and finally Person B buys apples from Person A. Person A now has the token back. Person A now returns the token to the bank and also pays the bank a slice of bread. Each person pays the government the food they owe. The moral of the story is to be satisfied with what you have, or others will take advantage!

Using a chiralkine system, chiralkine money would be created in R and L forms and exchanged for each transaction, then redeemed after the transactions have been completed; when each of Person A, B and C has both sold and purchased food.

Wouldn't the state take out a sales tax in the latter example too? Or is this a tax-avoidance scheme? If so, I think A, B, C might be better off bartering.

Sweden's finest (and perhaps only) collaborative, leftist e-newspaper Synapze.se

I suspect some ET'ers will be interested in the work that Martin Hay is doing on what he describes as Chiralkine contracts, the Resolution of Zero and  

Chiralkine Logic

Chiralkine Logic

Things exist (1) or not (0).  Nobody has ever detected the existence of a negative thing (-1). Either we can detect something we are looking for (1), or not (0).

Imagine a stringed bow where you have taken the bow in one hand and the string in the other. You can detect if you are pushing the bow (1), or not (0). You can also detect if you are pulling the string (1) or not (0). The pushing and pulling can be represented by a number pair, where the first number in the pair is pushing and the second pulling. If you push on the bow but do not pull the string (1,0), the stringed bow will move away from you. If you pull on the string but do not push on the bow (0,1), the stringed bow will move towards you. If you do not pull and do not push (0,0), the stringed bow will not move. If you pull and push (1,1), the stringed bow will not move, but it will stretch. It goes from a relaxed state (D) to an energised state (L) ready to do work, like money in an economy.

Pushing and pulling a stringed bow are related in that one and the same person does either, neither or both, but not as positive and negative numbers. Pulling and pushing in balance is different from not pushing or pulling at all.

We have built a great, global civilisation based upon an irrational belief in negative numbers, debt.  We cannot eat negative bread, drink negative water or ride on a negative bicycle, yet we treat and sometimes abuse our fellow humans, because we believe that they possess negative things. At other times, we can find ourselves unable to employ the real services of our fellows, or may even starve when they have real food, because they believe that we lack the equally imaginary counterpart of debt, credit.  The ancient Egyptians had some funny ideas about an imagined afterlife that drove them to build pyramids for dead people.  We have really let our imagination rip!

Negative numbers are powerful tools to use in making calculations about real things, but they must disappear at the end of the calculations, not be left hanging in the air as if they are real things themselves.

Chris, since you link to it approvingly, maybe you can explain it to us in your own words? Also, what does this have to do with economics? Or logic?

Finance is the brain [tumour] of the economy

Minsky himself certainly paid attention to stock-flow consistency. This is not surprising since he underlined the fact that stocks of assets and debts led to cash flows and debt payments through time. Minsky, just like Eichner, had a clear understanding of the relationships between the various sectoral balance sheets. As the following quote demonstrates, he was fully aware of the all-important quadruple entry principle, which we will discuss in Chapter 2.26.

The structure of an economic model that is relevant to a capitalist economy needs to include the interrelated balance sheets and income statements of the units of the economy. The principle of double entry bookkeeping, where financial assets and liabilities on another balance sheet and where every entry on a balance sheet has a dual in another entry on the same balance sheet, means that every transaction in assets requires four entries (Minsky 1996: 77).

Suppose, as we assumed in the transactions flow matrix, that firms distribute wages in line with production, that dividends are distributed according to past profits, and that interest payments, as shown here, depends on the past stock of deposits and on a rate of interest administered by the banking system. Suppose further that firms borrow, at the beginning of the production period as the circuitistes would have it, the amount needed to pay the wages of the current period. This is, as the circuitistes say, the first step of the monetary circuit (Lavoie 1992: 153). Thus in the first step of the circuit, both the loans and the deposits newly created by the banking system belong to the production sector. This initial step of the monetary circuit with private money is shown in Table 2.8A, which is a subset of the transactions matrix of Table 2.6.

A clear feature of Table 2.8A. is that it contains four entries. This is an illustration of the famous quadruple-entry system of Copeland (1949 (1996: 8)). Copeland pointed out that, `because moneyflows transactions involve two transactors, the social accounting approach to moneyflows rests not on a double-entry system but on a quadruple-entry system'. Knowing that each of the columns and each of the rows must sum to zero at all times, it follows that any alteration in one cell of the matrix must imply a modification to at least three other cells. The transactions matrix used here provides us with an exhibit which allows to report each financial flow both as an inflow to a given sector and as an outflow to the other sector involved in the transaction. In the current instance, the production and the banking sectors are the two parties to the financial transaction, and each sector must have two modified entries, since all columns must balance.

A peculiar feature of the quadruple-entry system is that it corrects a prevalent misconception regarding the creation and the role of money. In the mainstream framework, money is sometimes said to fall from the sky, thrown out of an helicopter, as in the famous parable by Milton Friedman. In that mainstream framework, which is highly popular in mainstream intermediate macroeconomic textbooks, money is a given stock, which seems to appear from nowhere, and which has no counterpart in the rest of the economy. Despite changes in the real economy, and presumably in financial flows, the stock of money is assumed to remain at all time constant. The quadruple-entry system shows that such a conception of money is meaningless.

Start out by looking at the video and the sample contract and accounting steps on the website. See how the chiralkine four-numbers (R, L, R, L) change with each step. The four numbers behave like a right, left pair of right, left number pairs: [(R, L), (R, L)]. Some steps involve exchanges within pairs and some between pairs. Each step is accounted for by a change in two complementary chiralkine numbers, one for each trader. Each exchange of R and L tokens maps to a change in state of property rights from each of the two different perspectives of two traders. When R and L tokens are created, a property right goes into a transition state (shown by a circle held by two people in the video). This is like a mortgage on a house. When two traders exchange R and L tokens, a property right transfers directly from one trader to another: there is no transition state. Thus the system treats the creation of "money" differently from the use of "money". In our three number monetary system, you can buy something from someone irrespective of whether or not they are in debt, so there is nothing to stop credit (money) from separating permanently from debt and pooling in the hands of fewer and fewer people. In a chiralkine system, you must have R tokens to buy with, and you must have L tokens to sell with. You cannot hoard or lend out R tokens (credit).

Now, it turns out that when you represent the accounts of traders in an exchange as chiralkine numbers, there are just 6 states. Remarkably (to me at least), you can represent lots of other systems the same way, such as a new voting system. I have also invented a game, which is described on the website. The game is shown as being played on an 8 x 8 array of token spaces, each of which can be in one of six possible states corresponding with the 6 chiralkine numbers. I think of this array as being like a computer hard drive, but in which each "token space" can be in one of six states, not just 1 or 0. The game works just like an exchange. Moreover, you can view the states in the array as if you are thinking in 4, 3 or 2-numbers. For example, you can let (1,0,0,1) represent +1; (0,1,1,0) represent -1 and all the other four states represent 0. Alternatively you can let (1,1,0,0), (1,0,0,1) and (0,1,0,1) represent 1 and (0,0,1,1), (0,1,1,0) and (1,0,1,0) represent 0. Examples of these different views are shown on the website. Thus, you can see visually how a 4-number system (which displays in 6 states) contains a 3-number system (+1, -1 and 0) and a 2-number system (1, 0).

I think that we should be able to use chiralkine numbers to build networks through which we can exchange information about our economic relationships without going through an intermediary. If we use these numbers, we can become independent of intermediaries that process the information we seek to exchange down to three numbers (as in money and majority voting). If we let them do this, the intermediaries have control of us. If we use four numbers, we have control of our systems. We can signal when we "abstain" in a vote whether we are happy with all the offered options or we reject all the offered options.

I believe it would be worthwhile for people to engage with this idea and come together to help develop it. I cannot do it all on my own. As one correspondent has noted so accurately, my maths simply isn't up to it!

Transaction 1:  S provides a service to J. The agreed amount is 1 unit. Since there is no money available, S and J enter into a chiralkine contract which creates 1 R unit for J and 1 L unit for S.  The Community is owed 1R by J and 1L by S (simple transposition of the row sum).

Transaction 1 Table

...

Transaction 4: M sells goods to S. The agreed amount is 1 unit. M does not have any money, so R and L money is created by M and S under chiralkine contract #4 (CC4).

Transaction 4 Table

2. When S provides a service to J, why is it assessed as "1 unit"? Is that arbitrarily agreed by S and J? Later in the game you write P provides a service to S. The agreed amount is 2 units. P owns 2L and S owns 2R, so no new money needs to be created. Why is the agreed amount 2 units? Because it is the largest amount that both S and P can exchange? Or because they are exchanging something which is in some sense twice as big as in transaction 1?

3. When S provides a service to J, J receives 1R and S receives 1L. Is this arbitrary? Could it equally have been 1L for J and 1R for S or does the "chirality" have to do with the fact that it was S and not J that provided the service?

(1,0) + (0,1) = (1,1)

but

(0,1) + (1,0) = (0,0)

This is beginning to be problematic. Apart from the fact that the table is incomplete as it doesn't tell you what A+A D+D, L+L and C+C are...

Finance is the brain [tumour] of the economy

All steps in a chiralkine system are represented by states undergoing transitions in cycles. Every state is defined only in terms of its position in a cycle relative to another state. There are six states, and they can be interconverted using 4x4 matrices (quaternions).

Chiralkine systems use a complex number composed of four elements (R, L, R, L) to represent each of the six states. Two of the R and L are 1's and 2 are 0s. The relative positions of the states in the cycles are represented by the positions of the 1's and 0's in the chiralkine numbers.

Chiralkine numbers can be used to represent the relative positions of traders in cycles of trade to which they are contractually bound.

Because every state is defined only relative to another, the system relies on the drawing of distinctions. Each distinction is of the form "is" (1) or "not" (0). Using four elements results in there being up to three distinctions that can be drawn.

Conventional monetary and mutual credit systems rely on three simple (not complex) numbers. In these systems, only two distinctions can be drawn. To see this, consider the three numbers as uncharged (0), positively charged (+) and negatively charged (-). A positive charge can distinguish itself from (-) and 0. It is repelled by itself (1), but not (0) by a negative charge OR by a neutral charge.  

Three distinctions can be drawn in a chiralkine system. One way to see this is to think in terms of uncoloured or coloured, red or blue and mine or yours.

Thus, chiralkine systems operate differently from systems based on three numbers, such as monetary systems and majority voting systems.

That's actually not a horribad idea. It's not clear to me whether it is superior, inferior or complementary to using inflation to maintain financial stability in a context of limited real growth. To figure that out, I'd need to sit down with pen and paper for an hour or two that I most likely won't have this week.

But what I can immediately say is that it doesn't need the extra unit of account, or any of the fake jargon.

- Jake

Friends come and go. Enemies accumulate.

I hope that this comment brings some focus and clarity back to what has been a very wide ranging discussion.

We can talk endlessly about the theory underlying chiralkine systems, but I invite readers to consider how they might experiment with using them practically once we have a prototype coded.

Whereas the First-named Person wishes to provide to the Second-named Person and the Second-named Person wishes to receive from the First-named Person the following subject:

....................................... (Subject)

...

whereas the creation of the chiralkine money requires that the ownership of the Subject be transitioned through a state of chiralkine ownership having separately tradable L- and R-forms for the duration of the existence of the chiralkine money;

...

the First-named Person and the Second-named Person will create chiralkine money in R- and L- forms, each in the amount of the Amount, and chiralkine ownerships in the Subject, each in L- and R- forms,

they will separate the chiralkine money and ownerships in the Subject so that the Second-named Person receives the R-chiralkine ownership in the Subject and L-chiralkine money and the First-named Person receives the L-chiralkine ownership in the Subject and R-chiralkine money;

...

upon redemption of the chiralkine money, the ownership of the Subject is restored, fully transferred to the owner at that time of the R-chiralkine ownership in the Subject.

The chiralkine contract has been checked by several lawyers. It properly handles exchange in a legal manner. The function of the exchange of R and L tokens is understood from a legal perspective.