Ebay Value Model
From UpliftWiki
This is a diagram of the Value Web Model of eBay, adapted from Verna Allee's work A Value Network Approach for Modeling and Measuring Intangibles
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Transactions measure only a part of the Value
The links in the diagram describe many flows of value beyond what is measured in buy/sell transactions. The bottom line aggregation of the sum of the transactions therefore only measures part of the actual value that sustain eBay...their "ecosystem" beyond their directly measured transactions.
Transactions are subject to early binding
A computer network is said to have early binding if the links in the flow of the network are bound at design time. A network is said to have late binding if the packets of information are routed on an as-needed basis. (See David Reed's work) Early binding is more "efficient" in that the network doesn't have to figure out where to route its information, but it is more brittle to change. Late binding is more resilient, but subject the the higher cost of discovery of routes on a per-packet basis.
Transactional systems can be said to have early binding. The chart of accounts defines labor to be an expense, to be added to the liability of the organization paying it. Having bound labor transactions this way, it is difficult to value labor as actually an asset, creating value for a community or a family. The full value of labor, its contribution to families and communities, and cost of minimizing it are all invisible to the early-bound transactional accounting system.
Transactions assume linearity
We assume that we can add things good will, income, amortized debt, and real estate assets to get a "bottom line" understanding of a company each accounting period. This is roughly akin to assuming that we can add apples, oranges, and snakes together if we convert them first all to grapefruits. Having a common grapefruit denomination somehow makes it all understandable. Just because we turn an interaction into a single number at the time of the transaction doesn't mean that adding these numbers together makes sense. Amazingly, the mathematical foundations of this assumption have been almost entirely ignored over the past 500 years since our current accounting system began. Mathematicians don't normally do accounting, and accountants don't do mathematics. See David Ellerman's [http://ellerman.org/Davids-Stuff/Maths/GENERAL-DEB.DOC Generalized Double-Entry Accounting - Showing What is "Double" in the Double-Entry Method]:
"Double-entry bookkeeping illustrates one of the most astonishing examples of intellectual insulation between disciplines, in this case, between accounting and mathematics. Double-entry bookkeeping (DEB) was developed during the fifteenth century and was recorded in 1494 as a system by the Italian mathematician Luca Pacioli [1494]. Double-entry bookkeeping has been used for over five centuries in commercial accounting systems. Remarkably, however, the mathematical formulation for algebraic operations on ordered pairs of numbers is little known, particularly in the field of accounting."
The problem isn't a shortage of bottom lines
There is a trend today which assumes that the problem with our accounting system is due to a lack of bottom lines, so folks add new ones. However, the fundamental ancient model of adding up linear transactions according to pre-defined categories in a chart of accounts needs to be re-examined. Perhaps we need a 'Transformational Accounting System to deal with evolving, complex, adaptive systems.
Opportuntity Value rather than just Opportunity Cost
Although opportunity cost is a well-established notion in economic thinking, the value of creating opportunity, part of the value discussed in Reed's Law and group-forming networks is something new that networks bring to our attention. Thus, a villager in a Bangladesh village who has the opportunity to rent time on a shared cell phone is being given significant value, independent of whether they actually use the phone and incur the transactions.
Space-forming networks
As an extension to Reed's vision of group-forming networks, we can envision networks whose nodes are spaces. Each space can maintain its own properties and characteristics. An Autocatalytic Space is a special kind of space that has the property that it expands with the addition of new stuff, in contrast to an Entropic Space that is "used up" when something is added. A shopping center space, for example, is "used up" when a physical bookstore is added to it. When Amazon.com appeared on the web, however, rather than "using up" space, it made the web larger by attracting a larger number of users, as well as providing a way of addressing book titles across the web.
Spaces can be nested. For example, we can think of the IP (Internet Protocol) address space triggering the DNS (Domain Name) space, which triggered the World Wide Web space, which triggered the eBay space, which triggered eBay Store spaces, etc. These spaces do not "use up" each other - eBay is free to grow to an arbitrarily large space without "using up" the web space.
Autocatalytic spaces
Spaces in which added stuff creates a larger space are called autocatalytic, akin to what Reed calls Viral Architectures Reed also refers to a phase transition (personal communication) in networks when the grow to a certain scale, analogous to a shift from ice to water. Gladwell refers to a Tipping Point.
One of the goals of NanoFinance is to see if by lowering the threshold of interaction for microfinance (women saving their own money, without any external debt), we can create an autocatalytic space for uplift - women helping each other to help themselves. The goal would be to lower the cost and increase the viral spread of the activity, in order for the network to move through a phase transition to become autocatalytic.
