Sovereignty isn’t like money

This is a very readable, cogent analysis of the challenges of democratizing capitalism. While I agree with the spirit of this posting, I think it conflates the process, the result of which we call “sovereignty,” with the fungibility of money, which is the hallmark of capital, the ability to transform an asset from one purpose to the other, regardless of the consent of all parties — A and B may agree, but C, owed money by B, may put that money to any use they want. Sovereignty, on the other hand, is a process that results in compromise without any reference to the specific power of the individuals involved, except their ability to deploy capital. The genius of capitalism is the fungibility of capital, which can be directed purposefully. But it lacks the deliberation between perspectives and equitable distribution of power that Democracy requires, so the analogy fails once you dig into it.

The VRM mailing list I originally posted this comment produced a reply that allowed me to expand on why the sovereignty-fungibility comparison is flawed.

By having a system of money (capital) that is built on the “word” of each individual or their sovereignty we distribute economic power. That is exactly the point of each of us having the ability to create our own IOUs (money, capital, credit).

It’s not a misunderstanding, but a disagreement. What you are describing is a system in which Tom Kleiner’s vision of democracy – “one dollar, one vote” – becomes a reality because the underlying sovereignty-fungibility comparison is flawed. By trading fungibility for sovereignty, we end up with a system in which economic power becomes one with the ability to marshal political power. I think that the evidence for my perspective in the clear in the Koch Brothers’ approach to social media and advertising. They flood the medium with self-reinforcing messages, a “paramedia” takes up amplifying their messages. The Koch Brothers treat social capital, as expressed through the mechanism of “votes,” as a commodity to increase the reach of their messages.

I think you are well intended, but that the aim is off, based on a flawed sovereign-fungibility construct that results in no distinction between doing business and doing politics. I envision a democracy where there is no connection between money and politics, though I am quite aware we are unlikely to get there.

Capital knows your ju-jitsu and will throw you flat on your back if you give them a mechanism like an IOU representing a share of the collective will expressed through democracy.

I welcome a counter-analysis, but will not engage in ideological debates.

What’s that $19B about? WhatsApp at a glance.

Doc Searls provides an excellent summary of the implications for trends in marketing and consumer privacy related to FaceBook’s $19B acquisition of WhatsApp. Here’s my take on the deal terms:

We have to assume there is a lot of overlap between the FB and WhatsApp user base. And, regardless of what anecdotal information we have about how people pay for or use the service, the potential revenue from the WA user population remains purely speculative. So, what do we actually know?

FB values WA users based on their activity, which represents about one message per day per user at the highest level. They are slightly more engaged than FB users, with 70% daily usage rate vs. FB’s 63% of users active every day. They are paying $1 per message sent per user/day, or roughly $0.00273 per message sent over a year. That’s a manageable low cost of traffic acquisition, but because the payment is concentrated in time, the financial impact on FB’s business could be pronounced, though we must acknowledge there is downside risk to the deal, too.

CNN Money reports that FB sees revenue of approximately $1.72 per user globally. It’s much higher in the US and Canada, where revenue is about $4.85 per user/year. This means the combined company could make up to $0.72 per user in the first year, if they implement ads in WA. However, it is important to note that FB’s ARPU for the Rest of the World and Asia are sub-$1. If most WA users are in Asia and developing countries, which I’ve understood is the case, the deal loses money more often than not under current conditions.

I doubt people will pay for the WA service (it’s unproven now) and, if they were to pay $1 a year, the deal is only a break-even for those users who pay. If 10% pay, which is a typical “Freemium” conversion rate used in projection, there is not sufficient revenue to prevent WA from being mined as a source of user data and implied intentions. As WA is integrated into FB, notably to FB’s user surveillance regime, which is the core of the FB business, it will likely need to add ad or VRM revenue to make the deal worthwhile. And that puts the whole deal in jeopardy, since there is little to no switching cost for users.

My $0.02.