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The universal store of value - Eve's Commonplace
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evepoole
evepoole
The universal store of value

Skins, pots, beads, gold, coins, camels, land, wine, stamps … throughout history and across the world communities have had different stores of value. The innovation of coinage created liquidity for barter economies, and the innovations of credit and fractional reserve banking have accelerated this liquidity to a froth. Stiglitz and others talk about economies as being reducible to information. Perhaps it helps to regard the universal store – the universal language - as value itself, as expressed through price. This abstracts from the material into the relative and, communicated through information flows, allows a more exact matching between supply and demand. Meanwhile, people have themselves become banks, living on fractional reserves, such that their lives become a house of cards, held up by trust, a trust in the faceless millions whose total actions sustain a securitized economy. Prices are increasingly free to be market-led, so flourishing for the seller is about maximising price by increasing demand, and flourishing for the buyer is about having enough of a track record in participation to have established trust – literally – credit-worthiness. What does this mean? First, that poverty reduction is not about material riches in the first instance, it is about creating, sustaining and protecting the poor’s ability to participate, i.e., their long-term ability to source material and other needs. This demands a more sophisticated response than the traditional ‘catch-up’ strategy whereby progress might be seen to be the developed world gaining last-century first world prosperity, as part of a logical global development lifecycle. Instead it requires a future-focused approach, harnessing mobile communications technology to leap-frog ahead, through noticing that traditionally illiquid economies are rendered progressively more feasible by by-passing money and moving straight towards value, through pricing. Noticing and valuing the developing world’s track record in economic terms by articulating existing systems of value – see De Soto - would facilitate the translation required to secure participation in the global economy. Enabling traditional economies to participate through alternative business models such as micro-credit and other ‘Bottom of Pyramid’ strategies might also reduce the risk inherent in a highly-leveraged global economy, by putting the bottom back into the market to supplement the capital adequacy measures required for participation in first world banking systems.

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