Understanding ξ and ×

Understanding Time as Money

Values and Rates

“My time isn’t the same as your time…” Many people first react to “Time as Money” with this statement–which is true. Your time almost always has adifferent value than my time. You have different skills and experience and I have my own skills and experience.

When I talk about “Time as Money” I do not mean time as Iexperience it nor do I mean the time as you experience it–the value of time between you and I comes from a transaction orexchange we agree to.

I call this value time and it is not connected directly to one orthe others experience of time observed.

What about Ithaca Hours? Isn’t that “time as money?” Partially. Ithaca Hours does denominate itself in hour, half-hour,and other units, however it also ties these units of labor to a fixed hourly rate in dollars. One hour = $10, half-hour = $5, andso on.

$10 was selected as the baseline because it was the “averagerate of pay” in Tompkins County where Ithaca Hours began. By backing itself in terms of another form of money, IthacaHours disqualifies itself from being a true “time currency.”

How much do you earn per hour? Most of us are accustomed to comparing how much weearn per hour to know if we’re better or worse off.

Minimum wage in the United States for the most part is near$7.75/hour.

Skilled workers or workers with skills in high demand arepaid more per hour.

  • Auto Mechanic: ~$18/hour
  • Lawyer with +20 years experience: ~$91/hour

If the mechanic works 40 hours, they earn $720.
If the lawyer bills 40 hours, they earn $3640.

Once earned, money is spent the same… While the mechanic and the lawyer have earned different amounts of money at different rates, when they spend it withother people, there is no expectation of future work. If the lawyer pays you $100, you don’t have an IOU for $100worth of “future lawyering,” likewise for the mechanic.

So how do you use “time” as money? By finding the “comparative advantage” between the participants of the transaction.The lawyer might be able to replace the starter on the car alone with some help from books or the Internet, or simply hire themechanic to do it instead. The price of the exchange willapproach the average amount of “time saved” by the non-expert—or value. If it would have taken the lawyer nine hoursto do it by his own experiential time, the mechanic should have a price close to ξ9 for that work. ξ9 is “nine hours of value”–even if the mechanic performs thework within one hour. The mechanic earns 9× actual time—ξ9/hour.

What about the lawyer? If the mechanic wished to pay the lawyer for services, anotherkind of comparative advantage calculation and pricing occurs.Naturally the mechanic can’t go through law school to “do it by themselves.” The mechanic will sanely rely on the ready-to-use experience of the lawyer. This is why lawyers are so expensive, so we would expect onbalance that the lawyer would charge a much more expensiverate for work to recoup the cost of law school or enjoy thebenefits of experience.If we take the $/hour as a guide, the lawyer probably earns close to 45×—ξ45/hour.

Summary

1h = one hour of actual time.
ξ1 = one hour of value time.
ξ20m = twenty minutes of value time.
9× = a rate of pay equalling nine times actualtime. If actual time is 2h, labor cost is ξ18 forthe mechanic, and a 15m call with the lawyercosts ξ11.75.
“Minimum wage” would be earning 1×.
Earning 0.75× is working at a “25% loss” of experienced time.

Other Versions of this Document

A Google Docs presentation for this content is available at https://docs.google.com/present/embed?id=ddkxk5dg_67zxzbbzhh


5 thoughts on “Understanding ξ and ×

  1. Thanks to @openworld for the intro to this. Much better thought out than most time dollar systems (I’m usually the guy saying, yeah but your time isn’t worth the same in a given context as mine). This system retains relative value of time, recognizes contextual skills (lawyer not valuable at mechanical) the opportunity cost of learning (having sunk years in education, a musician is another good example). Very much like the time compression concept as it makes skill a time leverage function. It also justifies wealth accruing to inventors of time saving devices (1MM people save 10 hr per week). Finally at aggregate level it drives work to the person who can most effectively do it.

    I would suggest the skilled trade version may not be a simple 9x since the lawyer may not still have the ability to do the same work regardless of the time spent (‘talent’). I can see <1x happening where it can be shown 'an average person' could perform a task untrained in 1x time (for standardized tasks). Also curious is that the valueproduced is dependent on the transaction counterparties (the lawyer may take 9x as long, another lawyer who is handier may take 4x and produce work closer to that of the skilled trade). This is an interesting insight, but not at all scalable. It is similar in this way to having 100 lawyer hours, except you end up with 100 lawyerX/tradespersonY hours.

    It is also not quite knowable how long a piece of work 'would take' if you haven't done it before (and of course if you have, you aren't a beginner any more). This unknowability unfortunately leads us back to market mechanics for pricing ("the value of time between you and I comes from a transaction orexchange we agree to"), but perhaps with a better 'intrinsic value' check. I also don't agree that a transaction is necessary to measure value.

    What is the float of total time available? If we are using time spent, it is the lifetime of the person available to them as 'credit' (assuming no early death etc). When we go to time saved it becomes more challenging. Saving people time is time x population sized, and can extend well into the future, even to the unborn, but future generations cannot be party to the transaction.

    How do we price an experience? Is it possible to simply add up the number of hours spent creating it?

    How do we price facebook? the sum total of the hours and skills needed to build it? I think this falls short of capturing the future value, which even current markets try to price in.

    How do you price art? Many artists have invested the time to develop technique, but this doesn't make their art worth what a picasso is worth?

    I think Time is a dimension of Value, and is a simple but inadequate approach to value exchange, even the more involved way you have approached it. I think it falls short, even with the leverage adjustment, to accurately represent value, in many of the ways the dollar system does (without the overt manipulation). It seems to pass the test of readily understandable value until we consider the variables in the current account. It seems to be a better currency because it is fundamentally 'scarce' but it really isn't when you start looking at 'time saved'. Looking at Time as a base, one can look at Competence/Skill (time leverage, in some cases from invested time, sometimes from talent), Risk (time/effort prior to transaction), Attention (1x time) and a number of others.

    I look forward to exploring your other posts, where I expect you have addressed many of these things.

    • To me its a pure form of fairness for any individual doing any task, there is a “minimum wage” for experienced-time vs. value-time. The only time see < 1× rates of pay happening are where the task of labor is shared between participants—for example, a teacher giving a 90-minute lecture to 30 students might receive ξ3m from each student for the "time experienced" during the class (the teacher provides 90-minutes of "value" simultaneously to 30 students—this is one way to price an experience.) If the teacher is very good or in a high demand the class would be priced higher, e.g. ξ10m/student for a 90-minute class giving the teacher an effective pay rate of 3.33×/hour. The value produced doesn't have to be absolutely the amount of value actually produced during a transaction, nothing stops a person from pricing their services at a given level, whatever the market will pay for, it will pay for. Everyone knows that there are lawyers (or anyone) who can charge whatever price they want, they may be under or overpriced just as with any other money system. I have always expected that "market mechanics" would set prices like this, and transactions just document those prices.

      The example I've used for "pricing an experience" is the rock concert. Imagine you have a three-member band with 10 roadies. Ignore the costs of venue and advertising etc for now. The band performs for two hours. The roadies setup, operate and tear-down the stage in eight hours. The venue holds 1000 people. Lets say that roadies are paid 4× and the talent are paid 32× So we have a required gross income of 10 roadies * 8h + 3 performers * 2h = ξ512. The minimum "price" of their two-hour long concert is &xi30.72m. Now there are a lot of other costs we've left out, but it gives an idea of how an experience may be priced.

      Pricing virtual goods like Facebook is harder. For the amount of data-mining they are able to perform they should perhaps be paying their users for the invasion of privacy. 🙂 So Facebook is in a similar situation for everyone else who have "given away" their service without ever charging for it, they need to discover a price by attempting to sell it and hope that they can keep their customers. Paying for the equipment and electricity and everything else is hard of course because no one knows what their prices in terms of ξ are either until they start transacting in ξ to discover them.

      The total amount of time available scales with the population for the initial amount of credit. If you do it in a "centralized" system, you design it as a kind of centralized authority to enumerate the unique individuals in the market. Initial credit is ln(people), so if 700 people, ln(700)=ξ6.55/person initial credit [ξ4 585.75 in the aggregate]. When some people demonstrate that they are saving their ξ (not spending everything over a period of time), everyone receives a small amount more ξ across the market to defeat the paradox of thrift. If no one is saving, then no one needs "more credit" to facilitate purchases, the market has enough money to facilitate trade. In a decentralized system (which I'm researching) you have to come up with a trust system to determine "who's a real person" and thus deserves initial credit. The amount of "time saved" isn't based upon your entire lifetime of available time, so value-time as a form of money is much more scarce than your experiential-time (days of your life). You can't save your own time by sleeping, you're only providing value to yourself so it doesn't count as a form of money. 🙂 The function I chose deliberately to create time as a synthetic commodity is very stingy on the allocation of ξ—where 700 people get ξ6.55108034, 701 people get ξ6.55250789 and so on. Its a very slow growth function, 7,000 people = ξ8.85, 70,000 people = ξ11.15, 700,000 = ξ13.45, 7 million people = ξ15.76. If you were to somehow bootstrap a large city like New York overnight onto this system, ln(18 900 000) = ξ16.75/person. This is only ξ316663310 at the start, and for you to have time to "save" you have to earn it from people—your initial starting credit doesn't count. In a properly working system (where participants have total faith in their money using the same rules for everyone) the ξ is money that never requires an exchange rate. ξ1 in America is the same as ξ1 in China, Russia or Africa.

      Art is another yet price that is "whatever the market will bear." De gustibus non est disputandum.

  2. “Pricing virtual goods like Facebook is harder. For the amount of data-mining they are able to perform they should perhaps be paying their users for the invasion of privacy”

    Facebook should be sharing revenue with its users as they have created a large portion of the value in that product. The real question is how you determine how much value all the parties to Facebook have contributed. My suggestion is that this is posssible once you understand the dimensions of Value (dimVal) and how these dimensions interact through value equations which define value spaces (Facebook would be at least one value space). Then participants understand what their participation means to them personally (explicitly knowing what is being traded and what the terms are.

    “Lets say that roadies are paid 4× and the talent are paid 32× ”
    how is this determined?

    “Initial credit is ln(people), so if 700 people, ln(700)=ξ6.55/person initial credit [ξ4 585.75 in the aggregate]. ”

    how do you come to the initial credit value? who controls this?

    “When some people demonstrate that they are saving their ξ (not spending everything over a period of time), everyone receives a small amount more ξ across the market to defeat the paradox of thrift.”

    a form of source adjusted demurrage? interesting.. what is the formula? who decides?

    “In a decentralized system (which I’m researching) you have to come up with a trust system to determine “who’s a real person” and thus deserves initial credit. ”

    I am interested in Trust and Identity as well, can you point me to the research? I have some links to these topics from diigo, though a lot was lost when Twine went down.

    “The amount of “time saved” isn’t based upon your entire lifetime of available time, so value-time as a form of money is much more scarce than your experiential-time (days of your life). You can’t save your own time by sleeping, you’re only providing value to yourself so it doesn’t count as a form of money”

    so time-value is time-doing so to speak? perhaps there is no credit at all then? this makes it difficult to buy a chair, or a house, no? or does xi not apply to that? should it not be possible to value a chair? (time or skill(time) or time(unskilled time))

    Thanks!
    /kdl

    • The 4× and 32× values are guesses for roadies and talents.

      I based the initial credit value to the simplest possible formula I could imagine relating to population growth—so I used the natural logarithm. Now I also wanted this amount of initial credit to be scarce enough so that it would have some value, or there’s no sense in bothering with it at all. If the origin of your new money isn’t from this formula, then it isn’t ξ and it isn’t the same form of money. [You can’t bring pyrite to a gold buyer and expect the same result.] But still increase the amount of money available to the population as it gets larger. I’m running a very small “community” by hand, and there are only 35 participants currently. ln(35) = ξ3.5553. So everyone knows that they have just over three and a half-hours of “value time” and in the entire “economy” there are just over ξ124 between everyone to use. ln(1)=ξ0. ln(2)=ξ0.693 and so on. When you extrapolate it to 7-billion people, ln(7e9) = ξ22.669/person or ξ1.58684232 × 1011 of “money.” A trillion dollars is 1012 of “money” and its believed that there is a $700 trillion derivatives bubble about to burst that the banks and financiers have invented for themselves, so I’m pretty secure in the thought that a single ξ1 will always be “worth a lot” in my mind.

      Formula for savings hasn’t been set yet, I may have some thoughts already published on it, but I can’t remember the details except that my thoughts are that it isn’t the “savers” who receive the credit, but the “consumers.” Imagine in the “700 person” model that 70 people have collectively saved ξ210 over about 6 days [ln(700) “days” instead of “hours” as the way to set the period of savings measurement]. The consumers should probably receive ξ210 / (700 – 70) = ξ0.333 of “new” credit. New credit to consumers is still added very slowly to the system. Once I have a “good” formula, the formula “decides” and this becomes automatic–because these are the kinds of things that shouldn’t be drawn into political situations (e.g. secret quarterly meetings by mostly unelected officials who have insider information on what’s changing). These are the kinds of systems that have to have negative feedback controls–and I think this one has it. If no one is saving their money, then no new money needs to be created.

      Trust and Identity I’m looking now at Raph Levien’s Advogato Trust metrics including the dissertation on “Attack resistant trust metrics”.

      Time-value (ξ) is a lot like having a $100 bill. There are many things you can do with a $100 bill with the opportunity costs of being unable to do any of the other things. When I use the term “credit” I don’t have any other way of describing a store-of-accessible-value-you-can-use-without-paying-interest, because there is no interest or loans in this system. Culturally, I don’t want this to happen because this is the most likely cause of economic cycles of boom/bust when bad-debt is painfully purged from the system via bankruptcy/recessions/depressions. I don’t believe that there should be some “authority” deciding who gets credit or who doesn’t. [Imagine someone in a poor community being turned down for a auto-loan by a banker because of their “risk.”] Since there is no one to decide whether or not you get the credit, you just get it, and its your responsibility to decide how to best use it yourself–if you spend it all, you’d better hope that other people in your community are saving or you can do some work for someone else to earn more ξ for yourself. Larger structures of cooperation or projects that require larger amounts of ξ than what anyone has access to personally will require cooperation and pooling of available ξ-credit. Having access to ξ-credit is a fundamental human right to access some amount of “money” to facilitate trade above the simple-barter level. You can certainly value a chair in ξ, it depends on how particular you want to be about accounting for the costs of the resources and labor that went into its manufacture and transport. Valuing real estate in ξ is a larger problem that will require users of ξ to design and come to a consensus on how to do it, but valuing a house as the sum total of the labor involved in constructing it + materials should be straight forward. [remember that almost all land existed before we invented money and drawing invisible lines to divide and sell it is a relatively new idea]. By the slow injection of new money into the system until no one needs to save as “much” for their personal security, economies should be much more stable. ith a stable commodity “backing” their money (time) and a genuine “minimum wage” (1× your labor-time for anyone else) that never has to be adjusted (up or down), poverty should be dramatically reduced and unskilled (or semi-skilled) worker exploitation (paying pennies/hour to the worker making socks overseas) should be outright destroyed.

      Time-value can also be “time saved” in transportation, a kind of efficiency. I have used the example before of walking 3 miles (about an hour for most people) vs. a taxi ride (avg. about 35 mph). The taxi ride saves you about 55-minutes of walking, so we should expect that the fare will be close to that (ξ55m). In the same way buses are cheaper than taxis, 25 people riding three miles may be paying a fare close to ξ2.2m/each. This neglects of course the cost of fuel, etc.

  3. “I based the initial credit value to the simplest possible formula I could imagine relating to population growth—so I used the natural logarithm.”

    Fascinating. Is there a process you followed to come to this conclusion? Is there good fit across different ways of approaching money supply?

    “Once I have a “good” formula, the formula “decides” and this becomes automatic–because these are the kinds of things that shouldn’t be drawn into political situations”

    while I agree with the sentiment, what if over time the formula is no longer ‘good’? ie what is the governance model? could it work on the basis of value created in certain dimensions? do you care if everyone signs up, or is this an opt in currency?

    “The value produced doesn’t have to be absolutely the amount of value actually produced during a transaction, nothing stops a person from pricing their services at a given level, whatever the market will pay for, it will pay for”

    I am hoping to eliminate prices and transactions and work exclusively with value, hence my interest in your representation of relative value of time-value to experienced time. That this breaks down is not surprising, there is still work to be done. Transactions and price setting are obstacles and friction. Market mechanics are ‘inefficient’ (not referring to the financial market ‘efficiency’ but rather a productivity version).

    “To me its a pure form of fairness for any individual doing any task, there is a “minimum wage” for experienced-time vs. value-time. ”

    I would suggest for the same reason market determined prices are unfair (if eminently practical). Hence the desire to express everything in terms of value. If a mechanic can fix a car in an hour where the doctor would take 8, the mechanic getting 8xi for one hour’s work seems eminently fair. When the mechanic goes back to the lawyer for legal advice, the mechanic paying 33xi for one hour of the lawyer’s advice may or may not be (him pulling the 8 doctor time hours out of his pocket certainly isn’t), but if it is based on the sunk costs of being a lawyer (school experience etc) it at least has a footing in fairness. Of course accounting for this is far more complicated than prices (and equally as complicated as determining the drivers for a price I suppose). Pure market mechanics have no such value based footing, as the price is dependent on a number of other factors beyond price. This is where regulation (in the best of worlds a ‘fairness’ function) usually steps in (how much would you pay for life saving heart surgery if it were a matter of pure market mechanics? how about if there were only one heart surgeon available?). In this sense time is infinitely expensive, depending on the context.

    there may be some interesting fodder in the property space too, with traditional property definitions sometimes based on mixing ones labours with the natural world (you are in a sense mixing labour with time, time-space is not such a large leap). Regarding your comment on land, scarcity and abundance come into play, but yes we have come to a modern assumption that private property is a divine end unto itself, and have forgotten even how to establish a legal basis for a commons, of which we have few left, having invented every manner of eliminating them).

    wonderful stuff, thank you

    /kdl

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