The following paragraphs are excerpts from our booklet.
The World
Creative commons publication platform - Access to information is key for the functioning of the economy. With few exceptions,
today‘s know-how is not a common good but is instead owned by individual
publishing houses and patent owners. In nature, 'information' is frequently treated as
a common good; accordingly, every human cell includes the full DNA even
though any one cell only uses a small fraction of the information.
The social and ecological challenges that our society faces makes it necessary that we utilize information as efficiently as possible and serve the interests of the whole society. We can do the same by creating publication platforms, where authors can win prizes for the best contribution in exchange for consenting to make their work available under the creative commons license. This would, among other things, catalyze the development of a library of textbooks that is freely available over the Internet.
There are already a growing number of books published under the Creative Commons license. What is still lacking is a publication platform with prizes; but this is not difficult to build with modern Internet technology. Companies could fund the prizes as a way to build brand recognition, just as they do to sponsor sports events.
The same approach can be used to fund research. Instead of the traditional research grants, there could be a mechanism of prizes. Researchers publish their results and compete for research prizes. The winners would be able to use the prize money according to their own discretion and will typically invest the funds in the next research project in the hope of winning a follow-up prize. In this way, every researcher would have an incentive to publish his research results on the commons platform, so a much larger number of projects will become public knowledge than is the case today, where scientific journals suppress articles that are not published. The prize money system will foster the accountability of researchers and ensure efficient usage of research money. Recently, Netflix was highly successful in using this approach to improve its algorithms for its recommendations for customer-renting films - see Netflix 1 Mio USD competition for details.
Corporate States - The economic crisis has forced governments to incur large deficits that have undermined the government finances. Going forward governments will be forced to scale down public services.
The institution of a political state with a democratic constitution is a consequence of the absolute power of kings in 17th-century Europe. The governments had a monopoly power over their people because the people could only emigrate at a great cost. The democratic processes were introduced to make the govern ments accountable. Democracy was thus a substitute for the lack of choice, which is typical for a competitive market place.
During the past 200 years more and more industries have evolved where suppliers have an oligopoly or a monopoly over their customers. Companies with a monopoly or oligopoly of power are similar to the absolute states of the 17th-century: the typical CEO has discretionary power comparable to a monarch. The citizens of a corporate state are the customers of the company.
Whether we are aware of it or not, today we are all citizens of Google and Microsoft. What we miss are democratic processes that make these corporate states accountable. Corporate democracy is more straightforward to implement than we might think. As a first step towards consumer democracy, we can utilize the fact that large companies routinely survey their customers. We can ask them to publish the results of their surveys on the Internet thus creating a platform for debate. These platforms would nurture public debate and create pressure for companies to adhere to customer requests. On the initiatives of their consumers, corporate states would take on more and more public services.
The introduction of democratic corporate states has several advantages: compa - nies with oligopoly or monopoly power typically have strong balance sheets, access to specialized domain expertise not available to traditional states and an international network making them ideally suited for international projects. These features make them ideally suited to take on tasks that we have traditionally relegated to the political state.
The social and ecological challenges that our society faces makes it necessary that we utilize information as efficiently as possible and serve the interests of the whole society. We can do the same by creating publication platforms, where authors can win prizes for the best contribution in exchange for consenting to make their work available under the creative commons license. This would, among other things, catalyze the development of a library of textbooks that is freely available over the Internet.
There are already a growing number of books published under the Creative Commons license. What is still lacking is a publication platform with prizes; but this is not difficult to build with modern Internet technology. Companies could fund the prizes as a way to build brand recognition, just as they do to sponsor sports events.
The same approach can be used to fund research. Instead of the traditional research grants, there could be a mechanism of prizes. Researchers publish their results and compete for research prizes. The winners would be able to use the prize money according to their own discretion and will typically invest the funds in the next research project in the hope of winning a follow-up prize. In this way, every researcher would have an incentive to publish his research results on the commons platform, so a much larger number of projects will become public knowledge than is the case today, where scientific journals suppress articles that are not published. The prize money system will foster the accountability of researchers and ensure efficient usage of research money. Recently, Netflix was highly successful in using this approach to improve its algorithms for its recommendations for customer-renting films - see Netflix 1 Mio USD competition for details.
Corporate States - The economic crisis has forced governments to incur large deficits that have undermined the government finances. Going forward governments will be forced to scale down public services.
The institution of a political state with a democratic constitution is a consequence of the absolute power of kings in 17th-century Europe. The governments had a monopoly power over their people because the people could only emigrate at a great cost. The democratic processes were introduced to make the govern ments accountable. Democracy was thus a substitute for the lack of choice, which is typical for a competitive market place.
During the past 200 years more and more industries have evolved where suppliers have an oligopoly or a monopoly over their customers. Companies with a monopoly or oligopoly of power are similar to the absolute states of the 17th-century: the typical CEO has discretionary power comparable to a monarch. The citizens of a corporate state are the customers of the company.
Whether we are aware of it or not, today we are all citizens of Google and Microsoft. What we miss are democratic processes that make these corporate states accountable. Corporate democracy is more straightforward to implement than we might think. As a first step towards consumer democracy, we can utilize the fact that large companies routinely survey their customers. We can ask them to publish the results of their surveys on the Internet thus creating a platform for debate. These platforms would nurture public debate and create pressure for companies to adhere to customer requests. On the initiatives of their consumers, corporate states would take on more and more public services.
The introduction of democratic corporate states has several advantages: compa - nies with oligopoly or monopoly power typically have strong balance sheets, access to specialized domain expertise not available to traditional states and an international network making them ideally suited for international projects. These features make them ideally suited to take on tasks that we have traditionally relegated to the political state.
Financial System
Digitize the financial markets - The financial markets are computerized and banks operate huge computer networks to
process the daily load of transactions. Computer systems hide the fact that the
underlying business processes are outdated. They were defined at a time when only
traditional postal services with overnight delivery existed; this is why even today international payments take two days and interest rate payments
are made in discrete intervals of a minimum of one business day.
In traditional mechanics we experience how minor defects cause big repercussions. The same is true with financial markets, where minor operational deficiencies can have a major impact. We can improve the operational efficiency of the financial markets thereby reducing uncertainty by digitizing financial markets and settling financial transactions in real time with second by second interest rate payments and by introducing digital financial contracts, where the full contract content is computer readable and not in the form of 200-paged contracts in lawyer speak with Excel spreadsheets. Such a development will reduce volatility in the financial markets and lower the likelihood of systemic risk.
For the record, OANDA proves the feasibility of operating a currency-trading platform with second by second interest rate payments that has also been licensed to a few banks. Behind the scenes, large banks discuss how to streamline the processing of financial transactions. Backing from the top management, however, is still lacking; but this can change at any time.
Market stabilizing investment strategies - In a complex system, as for example the human body, dynamic processes play a vital role. The heart pumps five liters of blood every minute: this is necessary to transport fresh oxygen to the cells and remove toxic waste.
In our global economy the analogous is lacking: investments in the financial markets are largely based on trend-following strategies, such as buy and hold. If, for example, pension funds buy property, then this bids up property prices, which has a negative impact on private families who then cannot afford to buy a private home.
We need stabilizing investment strategies, which dampen price volatility; we need to prevent the oil price from first rising to 140 USD per gallon and then, within a few months, dropping to 30 USD, as occurred in 2008.
Investment strategies that buy assets when market prices fall and sell assets when prices rise, are stabilizing investment strategies that lower price volatility. The profits that these strategies generate are a reward that contributes to market stability. The world economy should invest the bulk of its assets in stabilizing investment strategies, which would reduce market volatility and increase economic efficiency.
It may seem impossible to develop stabilizing investment strategies because this would be akin to building a Perpetuum mobile. This, however, is not the case. The global economic system is not a closed system. It is possible to create value if a service benefits society at large. Investment strategies that stabilize markets do exactly that. An example of such a service is our investment products offered on the Olsen Investment Platform.
In traditional mechanics we experience how minor defects cause big repercussions. The same is true with financial markets, where minor operational deficiencies can have a major impact. We can improve the operational efficiency of the financial markets thereby reducing uncertainty by digitizing financial markets and settling financial transactions in real time with second by second interest rate payments and by introducing digital financial contracts, where the full contract content is computer readable and not in the form of 200-paged contracts in lawyer speak with Excel spreadsheets. Such a development will reduce volatility in the financial markets and lower the likelihood of systemic risk.
For the record, OANDA proves the feasibility of operating a currency-trading platform with second by second interest rate payments that has also been licensed to a few banks. Behind the scenes, large banks discuss how to streamline the processing of financial transactions. Backing from the top management, however, is still lacking; but this can change at any time.
Market stabilizing investment strategies - In a complex system, as for example the human body, dynamic processes play a vital role. The heart pumps five liters of blood every minute: this is necessary to transport fresh oxygen to the cells and remove toxic waste.
In our global economy the analogous is lacking: investments in the financial markets are largely based on trend-following strategies, such as buy and hold. If, for example, pension funds buy property, then this bids up property prices, which has a negative impact on private families who then cannot afford to buy a private home.
We need stabilizing investment strategies, which dampen price volatility; we need to prevent the oil price from first rising to 140 USD per gallon and then, within a few months, dropping to 30 USD, as occurred in 2008.
Investment strategies that buy assets when market prices fall and sell assets when prices rise, are stabilizing investment strategies that lower price volatility. The profits that these strategies generate are a reward that contributes to market stability. The world economy should invest the bulk of its assets in stabilizing investment strategies, which would reduce market volatility and increase economic efficiency.
It may seem impossible to develop stabilizing investment strategies because this would be akin to building a Perpetuum mobile. This, however, is not the case. The global economic system is not a closed system. It is possible to create value if a service benefits society at large. Investment strategies that stabilize markets do exactly that. An example of such a service is our investment products offered on the Olsen Investment Platform.
Booklets and More Information
