Incentives for Value

INCENTIVES

WIN-WIN COLLABORATIONS

“I call myself Amani Williams now” my new colleague told me.

He’d recently come back to his home town in China from Africa.

“When I first came to Nairobi, I just asked people if they knew the word for peace and they said Amani and that it was a good name. Then I found out that Amani was also an Arabic name as I was often welcome at mosques.

But then I worried that Christians might take offence about that name and think I was Muslim and maybe even a terrorist! Ha ha! So I chose Williams as my second name. Sometimes introducing myself as Amani and other times as Williams depending on the situation.?And if they were Muslim, I carried a small Koran with me and if they were Christian – I had a Bible in another pocket.” He chuckled.

“I also developed a story about my heritage. You can see my skin is a little dark – especially when I’ve been in the sun. So I told people I was only half Chinese. My mother was born in a village in Uganda I said.

This story helped me a lot.”

Last year on the train to Beijing, Amani and I sat together and talked. It was an eight hour ride, so we had plenty of time. He’d been back in China only a couple of years since his ten years in East Africa – Kenya, Tanzania and Uganda working with China Railways. His English had a mildly African accent and he spoke Swahili fluently – “better than English”, he said.

As I listened, I thought about how different political ideologies, laws and religions were like maps that each different culture had developed to help them move ahead as a collective, finding a way through life. But no matter how helpful they were, as the world changed and got larger they invariably hit jarring anomalies which contradicted many of their fundamental assumptions.

Usually this occurred when people encountered others in cultures with different maps – different hypotheses - it could trigger disagreement - each side unable to accept what to the other was fundamental. Unable to go forward simply because they had a different point of view.

When this happened, relations could be tense and trust could break down - the way ahead, stymied.

Amani, like most Chinese, however seemed at ease at managing and adjusting conversations with others to steer the dialogue towards good outcomes while looking for compromise. The Chinese call these “win-win” collaborations (双赢合作)?- recognizing that while each person may have different priorities and incentives, both can still potentially achieve good outcomes.

He told me a story that illustrated this from the time when he was in Africa.

“One time I had to travel through some very high mountains. We were on our way to the Congo. It was a very narrow road along the side of the mountain and a car passed us swerving in front so that his driver’s side door hit our front fender. After the crash we pulled over and saw that he was slightly injured, so we gave him some money and took him with us to his house further down the road.

“But the word seemed to get out and when we got to the next village we were surrounded by angry villagers. They had all heard some of the story and the village chief was demanding that we pay a lot of money for damages to the car and injuries to the driver. The chief had brought the police inspector for the region with him - just a young man. The inspector accused us of being at fault for leaving the scene of the accident. Everyone in the village who was there chimed in on this point and the chief and the villagers demanded that the police inspector put us all in jail.

“I realized that we were no match for this. But I also saw that the village chief was bullying the young police inspector. So I decided to talk directly to the inspector.

‘you are the police inspector for this region,’ I said, ‘so why do you have to take orders from the chief? You already know the law. We did nothing wrong. The other fellow was at fault for driving into us. We gave him money and took him home.’

“But the crowd still complained. We were Chinese! They didn’t trust us. So I told them ‘Yes, I’m half Chinese . . . my mother was born in Uganda, so I know your customs . . . (I was speaking in Swahili) . . . and I know the law. The other driver was at fault. He swerved into us. There was nothing we could do to avoid hitting him.’ This seemed to warm the villagers to us a little. They were quiet.

“After a pause, the police inspector, younger than the chief but not wanting to look weak, and maybe relieved by the feeling that the crowd might have some support for us now suddenly spoke up “Yes, I can see that you didn’t break the law. You may go, but be careful on the road and don’t get into any more trouble.”

Amani had finessed what could have been a disaster for his team. The irony however was that it was the fiction that his mother was Ugandan that immediately bought some sympathy from the crowd – a direct appeal to their community – enough so that the police inspector felt he could settle the matter according to the law while at the same time deflating the village chief’s belligerence.

Of course to others, not just in Africa, but also in many other places, Amani’s props: his Bible, his Koran and his claim of having a Ugandan mother could if found out, be construed as ‘deceit’ – compounding people’s suspicions that foreigners, and particularly Chinese were not to be trusted.

But for Amani, in Africa they were essential tools for managing relationships with other people, symbols of respect - incentives for trust.

LOOKING OUT FOR INCENTIVES

In nature, large colonies of animals, birds and insects are able to develop cooperative social organisations. Human beings are also perfectly capable of developing cooperative societies with sustainable and shared social standards. In many of our present societies we continue to practice philanthropy, offer hospitality to refugees, provide free medical care, education, income supplements to all and promote freedom of religion. However, as is the case with all human relationships, such dependencies between people are tenuous and can be ignored or even abandoned without the presence of socially sanctioned incentives or inducements to maintain cohesion.

Incentives can be subtle, like Amani’s use of props to manage relationships in Africa, or overt. In China, overt incentives are everywhere. Discounts, coupons and promotions, usually only small amounts are offered and rewarded in almost every kind of commercial transaction.

Red Envelopes stuffed with money are cultural icons which when given at the New Year festival signal good luck and impending wealth - an important incentive for social cohesion in China. Red envelopes will also pop up frequently on your phone offering small rewards.?And if someone sends you a red envelope with a small amount - a kind of cheerful greeting - you can cash it in or simply respond, returning another red-envelope with a similarly insignificant amount to the sender.

But incentives are not always about money.

In China people also give each other gifts. Often giving a gift will invite reciprocity. The other person will feel they should give something in return. So gifts are also given when special consideration is asked from someone who may be in a position to help.

Other kinds of informal incentives are embedded in routine day to day relationships. We give stars – a score out of 5 to drivers when ride hailing, signaling our approval for the driver’s services. And in training schools all over China, children who attend after-school classes are awarded stars or points during each lesson. These are offered as incentives to focus on the lesson, to do your best and behave well in class. After class the stars can be used to buy toys displayed in the reception area.

Points, stars, hearts – incentives - on WeChat Moments and other apps that record people’s judgement of someone else’s behaviour, their ideas, their tastes or the services they provide are everywhere in China.

The banker, Mark Carney explains that this is the same phenomenon that Adam Smith described over 250 years ago in his book “The Theory of Moral Sentiments”.

“Smith proposes a theory of ‘mutual sympathy’ in which . . . the feedback we receive from perceiving (or imagining) others’ judgement, creates an incentive to achieve a mutual sympathy of sentiments”

Following someone, liking something is a subconscious reflex to an incentive that persuades us to adjust our own behaviour to be more like that other person. In any kinds of social encounter, finding and applying the most appropriate incentives can present a way to bring people into harmony with each other. Why is this important?

Today in most western or western influenced societies there is a tremendous amount of contentious behaviour driven by strong opinions. People feel strongly about their rights and freedoms, the environment, personal autonomy, political correctness, corruption, business ethics as well as government economic and policy directions. Our present democratic systems of government foster this by promoting political parties – factions of opinion -?as the preferred structure in a parliamentary democracy. Those who serve in government are generally expected to support the position represented by their party.

The principle at work here is that factional governments will be more likely to foster debate about new policies – curbing those that might be self-serving, or weighted to favor the ruling faction. But while this classical debate model has survived for several centuries inside parliamentary cloisters it has now become overwhelmed by social media, where complex issues are reduced to a cipher, a label or slogan which can be used to unite the public to support one side against the other.

Factionalism, then can easily degenerate into extremism. In some emerging democracies, each political party represents a tribe and the members of each tribe are encouraged by the system to fight against the other for supremacy, leading to bloody battles led by party gangs. Like proxy warfare, factionalism and disagreement tends to encourage argument, anger and violence while discouraging constructive solutions to real social problems.

Asians however generally regard disagreement as the main obstacle for moving on and responding to changes in the world. They look for ways to ameliorate the obstacles created by staunchly held opposing views. They look for win-win outcomes from mediation. And if incentives are applied as tools for mediation in socially sanctioned communities and organizations, they can promote constructive agreements and initiatives about the way ahead. Incentives, then can offer a way to implement governance at the grassroots.

Certainly the Chinese, with their immense populations have always understood and made use of incentives for promoting self-governance in society. Since the earliest times Chinese philosophers have been concerned about using the right words?- or names in the right context. Conversation needs to be constructive. In Chinese classical thinking, speaking with others should follow the correct forms - patterns which consistently reinforce people’s perceptions of order in the world.?

For example the concept of Filial Piety (孝xiao) – respect and care for your parents and elders -?has become deeply embedded in Chinese culture over thousands of years, an incentive for good behaviour and social harmony. Such conventions were passed down in the language, each generation guiding the next to ensure that people in society would understand how to behave towards each other in a way that would maintain a ‘mutual sympathy of sentiments’.

In any society it is both rational and pragmatic to promote and incentivize harmonious behaviour. In China with its immense populations, it would be ludicrous to even imagine the number of police you would need to keep society under control simply through the enforcement of laws.?Incentives for harmonious behaviour have always been the most effective method of governance in Chinese society.

But incentives can also be misused if they aren’t carefully adjudicated.

As live-streamers in China have discovered, behavioral incentives can be an incredibly powerful way of selling – selling almost everything including the illusion of companionship. A young man just out of school who has found a job in a factory on the periphery of a strange new city, far from his home town, finds himself looking forward to the time after work when he can watch an evening session with a popular live-streamer on his phone, a young woman who seems to talk directly to him as if they were alone together. She is wonderful. She complements him and makes him feel rich and powerful. In his enthusiasm for talking with her, he forgets to cook and eat his food and just falls asleep, in his work clothes, clutching his phone.

But she never hears a word that he says, because she is talking to thousands, promoting the same illusion. Those with enough money donate gifts, or money online as she talks. They are addicted to the sound of her voice, her sultry looks, her complements and jokes. This is how she makes her income.

Anyone is now free in this online world to use the enormous power of incentives to persuade large numbers of people to ‘like’ them. Any individual – any business - is also free to provoke others to follow or ‘like’ fake news, even to become mesmerized by depravities – crude, ugly or antagonistic social behaviors. This can, and is already creating chaos in many societies.

So promoting the right incentives is important.

While incentivization can and should be a fundamental tool for governance, in the West we have mainly relied primarily on disincentives – laws and punishments - fines, jail time - to coerce people to behave properly. And where there is no applicable law, or where the law lumbers through the courtroom encased in and trapped by procedure, costs, lawyers, and argumentation then people feel free to do as they please. Evading the law can even become a mark of respect.

For society to work well for all in a way that ensures that people are safe, comfortable, healthy and happy, stable societies need to develop incentives which at the very least incline people to be friendly with others, to work together, and to help and support each other.

To be good.

THE GREAT EXPERIMENT

I remember the time in January 1979 when Deng Xiaoping visited America. It was all over the news. He went to a rodeo and waved a cowboy hat given to him by two cowgirls in front of a cheering crowd. There were visits to a Ford assembly line, to Boeing’s aircraft factory in Seattle and NASA’s space program in Texas.

The impression he left was engaging, friendly – someone whom everyone could feel comfortable with – even admire. The visit must have made a huge impression on him too. It seemed to have energized Deng to go ahead with an intense program of reform and modernization, sparking in turn a surge of experimentation across the country. That burst of energy unleashed by Deng after his visit to America was what launched today’s China - a glowing parade of immense cities thriving and wealthy –?but with a population still struggling to find a balance between growth and a broadly sustainable quality of life for everyone.

So how did Deng’s government achieve such a startling transformation in the country? And how could that strategy be applied today to achieve a more sustainable common prosperity?

Dr. Yuen Yuen Ang, at the University of Michigan describes in her 2018 essay in ‘Foreign Affairs’ how Deng incentivized his army of over 50 million bureaucrats, scoring those at local levels to achieve rapid economic growth, rewarding them with promotions, performance bonuses, public rankings, prestige and honorary titles. At the lower levels, “street level bureaucrats . . . inspectors, officers and even teachers” were incentivized with “an array of additional perks, such as allowances, bonuses, gifts and free vacations and meals” yielding a “results-oriented culture in the bureaucracy” -?encouraging everyone to achieve higher economic growth.

But, we realize as we read on, it was not simply the incentives. It was the way the directives from the top were mobilized at every level across all provincial and local governments that allowed the whole process to work. The lesson was that deploying localized incentives at each level across large populations could encourage millions of people to collectively achieve things which at the outset might have seemed quite impossible.

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MARKETING POLITICAL COMMODITIES

My thoughts about all this started more than a decade ago in 2006 when I was working on a project in Italy. During most of the year, there had been various elections, the main national election coming in April when Silvio Berlusconi, the incumbent prime minister representing a messy coalition of eight parties was ousted by Romano Prodi representing a centre-left coalition of some twelve predominantly left wing parties. Besides the flurry of elections, changes to the voting law confused everyone. Throughout the year politics was incessant. And scandals were notorious. Berlusconi’s almost universal control of the media continued to flourish despite several frantic legal challenges. In late summer, I was on a business trip to Prague. On a walk down to the river I met an Indian student and we started to discuss politics, democracy in India and in Italy.

I had an idea then that ‘representative’ government as we practice it is past its prime. Electing people to represent us in government is a leftover from a time two hundred years past, when people were constrained by distance. In those days most people lived and worked in small villages and towns spread across large areas of farmland. Government was centralized, usually in a capital city. Transport and communication was not easy. In order for country people to have a voice, there appeared only one solution: to appoint or elect a local patron to travel to the capital as a “representative” of the community’s voice in government.

Much of this early architecture of government still survives today. Representatives to government are elected within community divisions that have geographical boundaries. This would have been a natural structure in a largely agrarian society, where land and land ownership bequeathed power to parliamentarians. Reminding of this too are the typical party divisions that fall into categories of right wing and left wing in which the former signifies the power of the land owners, and the latter the emerging power and wealth of worker communities in an industrial and more urban society

In general, it can be said that these forms are very far out of date now, making an awkward fit with 21st Century society. Our present society is now very close to universally connected by instantaneous communications technologies and forms of high speed transportation, certainly far beyond the constraints of agrarian communities and frequently beyond even national boundaries that isolate increasingly diverse populations into artificially separate “nations”.

We have also become progressively more urbanized as our global population grows. And we live among sophisticated networks of communities which have influence and power at many different levels in society. Besides communities of location such as cities, municipalities, towns and villages, we have also communities at the workplace, business communities, trading communities, educational establishments, arts, musical and cultural communities and public service organizations. We have travelling communities such as tour groups, on cruise liners, at conventions and trade shows, online communities like Facebook, LinkedIn, WeChat, Twitter, Instagram with their subsidiary communities based on personal or public interests, skill networks, professionals, hobbies and networks of families, friends and acquaintances.

That day in Prague, I suggested to my new friend that rather than continue to try persisting with our present rites and protocols of government, inherited from a bygone age and awkwardly applied to present day circumstances, we would in the future see people representing themselves in government. People would use their mobile devices to vote each time they had some interaction with a government service – much like satisfaction-surveys - providing feedback on government performance.

Computer systems would sort and compress the Big Data from this feedback, producing reports, trends, and consensus information about the level of support for government policies.

Several years later however, I realized that although this online survey might ensure that party factions would be less likely to have overt influence on people’s levels of satisfaction, the only thing it would really test was whether government officials were good or bad – a ‘yes’ or a ‘no’ result – the digital paradigm. This would be much the same as our present electoral system, but online and cumulative instead of once off?- every four years.

Our party systems by themselves tend to influence voters to vote ‘yes’ for the candidates in the party with policies that appear the most attractive to us. The only alternatives to this ‘yes’ then are disincentives. If you don’t like the party in power, you can either vote for another party whom you might also dislike a little less. Or you might not vote at all.

Online satisfaction surveys work the same way. The disincentive is again ‘poor performance’ which simply triggers negative feedback.?Disincentives then serve no real constructive purpose. But they can have a huge effect on public participation, either polarizing social consensus or simply pre-empting support for any public policies.

Voting and satisfaction survey data in fact look remarkably like the kinds of incentives that we use to sell commodities in the market - the mercantile paradigm - surveys that test whether officials or parties are marketable.

CONSTRUCTIVE INCENTIVES

Incentives that encourage active public participation would be far better; active feedback driven by incentives that motivate people to innovate and create new solutions ‘localized’ to the policies being addressed in government directives.

‘Constructive’ incentives could guide people towards finding ways of improving their lives – not how to do it – but what the targets might be, so that people were moved to try different ways of getting to those targets.

As Yuen Yuen Ang describes it in a later lecture, China’s top down directives initiate a process that incentivizes:

1.?????“Bottom up improvisation using local resources and features” leading to

2.?????“Diverse solutions tailored to local conditions and stages of development.”

Ultimately, tapping into peoples’ desire for a better quality of life like this is an extremely powerful way to enable reform. When explicit incentives are offered to over 1.5 billion people they can invoke the impetus needed to achieve goals that might to the individual have seemed impossible to achieve on their own.

The first step, of course is to set targets. Once the goals or targets are clearly laid out the second phase is to create the right incentives for achieving those targets. Each incentive should be designed for a specific target audience.

For example, we might first ask in which segment of society would we want to use these incentives to influence people’s behaviour? And secondly in what situation, and in what way would it be useful to influence people’s behaviour in that segment of society?

Perhaps following Deng’s first approach, we might also develop incentives for public servants and government officers to provide motivation for them to work together with people, while supporting new ways of improvising and adapting to the new directives.

Eventually however every one should have the opportunity to compete for incentives. And while there will invariably be people in different groups, with different goals and incentives, if the goals of reform and the incentives on offer are not clearly understood by those who are needed to make the change, then the new directives will be thought unrealistic and widely ignored. Many will simply cling to what they know, coasting along on the old economic expansion track - looking for easy ways to make money.

But of course just making money can’t be the goal in the coming decades. There are new targets to achieve that will require people who have the skills and the motivation to perform them within an entirely new set of specializations.

In China the key targets have already been made very clear: ‘Vocational education’, ‘Cutting edge technologies’, ‘Sustainable growth’, ‘Net zero carbon emissions’, and ‘Common prosperity’. These targets are also interdependent. For example:

‘Vocational education’ leads to ‘Cutting edge technologies’ by giving upwards of 200 million young people the job opportunities to innovate new products, start new businesses or work in new industries.

‘Cutting edge technologies’ leads to ‘Sustainable growth’ – by inventing new technologies to measure, collect and process data that show where and how to replace, renovate, improve, or adjust unsustainable infrastructure to become sustainable.

‘Sustainable growth’ will lead to ‘Net zero carbon emissions’ – by replacing unsustainable energy infrastructure, activities or industries with new energy systems.

And finally, achieving all these targets would precipitate a form of Common Prosperity that would offer coming generations the opportunities to find a sustainable quality of life far beyond those available to them today.

Each of the targets and their dependencies also suggests the kinds of incentives that would be needed. For example, Vocational education suggests that it may be useful to have a much wider academic syllabus than is available now to the majority of students. This new syllabus should offer strong support for nurturing young talents through a wide variety of activity streams from primary school onwards. All students would be equally eligible to take part in standardized tests and achieve marks, grades, levels and awards in any of the streams that piqued their interest.

Whatever strategy is proposed for the education system a strategy for rewarding incentives would naturally follow. It could be that a universal digital Credit Bank is established to collect points data on every student’s learning achievements continuously throughout their life.?This would include awards for any credits (marks or points) not just from academic achievements, but for work experiences, and other special accomplishments.

Beyond these educational incentives, Cutting edge technologies could be motivated by achieving Sustainable growth targets. Specific incentives could be derived from tracking progress towards the targets for greenhouse gas emissions, biodiversity intactness or even an index of progress towards Dasgupta’s ‘Impact Equality’. Progress towards these targets could be tracked predominantly with satellites not just nationally and regionally but also at local levels - provinces, cities, communities, companies, even individuals with credits (points incentives) awarded for advancing progress towards these goals.

Tracking calibrated data continuously across many locations will be necessary to support the awards of credits (points incentives) for progress towards these targets. And generating consistent and standardized data that measures the impact on for example changes to the carbon footprint at each location from refit, renovation or replacement of infrastructure, will require demanding cutting edge technologies.

With the introduction of an array of digital data collection systems, incentives could be awarded in the form of credits (points incentives) for initiatives that showed progress. When anyone’s credits (points incentives) reached a certain level, specific rewards and prizes would be offered which could be redeemed with those points.

This would motivate everyone, every individual, every community, every company or branch of government to try to work hard to find and develop new ways to advance their own score, helping them, their group or their company to win the highest awards. The general public would need at the same time to be aware of who had received awards, increasing the prestige of the winners in the community.

CURATING THE CREDITS

In our scenario so far we’ve suggested that we could have a universal Credit Bank curating the points incentives indexed to everyone involved in the processes necessary to achieve the targets. Moreover this Credit Bank would need to provide a valuation function, like Kublai Khan’s “valuation experts” who were charged with the management of the ‘Store of Treasure’ that backed up the value of paper money during China’s Yuan dynasty in the 13th Century.

These valuation functions would record the value of the Credit Bank’s ‘store of treasure.’ Credits deemed to have a nominal monetary value when they were awarded, could still be redeemed with an award at any time throughout the lifetime of the person or entity who had earned them. Redemption would mean that they would be converted to cash at a conversion rate determined by the amount the value of their credit had increased, or decreased since the time when it was earned.

These valuations would be derived from the increase or decrease in the measurements of sustainability associated directly with each specific class of incentive between the time the credits were awarded and the time the credits were redeemed. Once redeemed, credits of course would still be retained as data in the Credit Bank, but would have no further intrinsic value.

In theory then these credits in the Credit Bank, while marking progress towards national goals, would also be held as an investment for each individual. This would start accumulating from the time they began to learn at school, and continue until they no longer needed to work anymore. Credit scores in the Credit Bank could then become a kind of pension – a secure deposit in the Credit Bank which could be withdrawn at a later time to pay for living and health care expenses.

THE CHINA BRAIN

Besides motivating and rewarding people, the points system in the Credit Bank would have another purpose as well. Points are data, and there will be an immense volume of data coming from the responses to incentives. This vast trove of data will be available to develop high level performance analyses; reports which can easily be viewed at the top levels of government. Different reports would show where new initiatives were taking root in different locations across the country. They could also show where nascent success stories were emerging as well as places where failures and setbacks were common as well as why that might be happening.

Observing where there were success stories and predicting where and how successful initiatives might be adaptable to other recommended locations could easily be achieved using Artificial Intelligence (AI), rapidly increasing the rate of progress towards targets across the whole country.

To generalize from this a little further, awarding points, stars, likes, incentives would behave like the ‘weightings’ that build up on each neuron in an artificially intelligent neural by increasing the weight of a specific data point in the stream of data being processed, giving it more significance.

Initiatives that were successful in meeting the criteria of the directives would naturally generate more points, or weightings showing the improvement in the quality of people’s efforts to implement the directives . . .adding nuance and detail to the quality of the response to the directives at every location. This could very quickly amplify the effectiveness of people’s efforts, achieving a better outcome for every one of the participants.

It could also become part of an extremely successful model of governance in which China could be the pioneer. The situation at the moment is ripe for exploiting new avenues to prosperity.

VALUE MARKERS

Last autumn, Helen, one of my colleagues told me a story about how a Taekwondo training school had held a Flea Market in an open air plaza in our shopping mall. Like all training schools here, they awarded points to students for their achievements and students could then use the points they had won to buy toys inside the school. The Flea Market, was an extension of this. They could only use these points to buy and sell there. They couldn’t use money. ?

The whole atmosphere of the Flea Market was cheerful and exciting. Each shop had a unique name created by its owner. And the kids were learning something about real life business too. “the store owners welcomed me and if they noticed that I didn’t buy anything, they would give me a discount.” But then there were other kids who showed no interest in business: “One five year old girl was selling a soft toy for only one point. When I checked the price with her grandma, she said her baby would only sell it for one point, no higher.”

She also noticed that “some other kids were trading with nothing in their hands. They just walked around the market and looked out for products with a low price, and then sold them to others at a much higher price.”

Helen says she learned a lot from this experience. A lot about money. While it showed that in a restricted environment points or incentives could be used like money, for trading, it also revealed just how detached prices could become from the specific nature of the articles.

On the one hand, the little girl was insisting that the value of her soft toy was 1 point – no more and no less – as though its value was tied irrevocably to its singularity. While at the other end of the value spectrum, some boys were trading to raise prices as much as they could, as though the points themselves were commodities that could be increased by selling anything that could convince a buyer to hand over even more points ?- effectively acting as sales agents for primary sellers.

Normally, incentives, points as far as they are countable, are viewed as an intermediate instrument that can be exchanged only for a specific reward – a prize, toys, options, shares, or money. The reward is only part of the incentive. In the case where the reward is for ‘real’ money, then it is simply a way of substituting you’re points for an exchangeable token which lets you choose other kinds of rewards instead. Arguably then the points have a type of value which is largely independent of any specific monetary value.

Points are actually value markers. They mark specific dimensions of intrinsic value. Money too is an effective value marker, but for another kind of value. So how do value markers work?

Let’s try to imagine we’re in a self-driving car. The car is being directed by an AI system which is detecting and interpreting data from various sensors. LIDAR, and other proximity sensors are mapping the environment around the car – objects, other cars, bicycles, people, road-signs and traffic signals – all things that the neural network has learned to interpret in the context of your car’s location on the map. There are also sensors for gas or energy consumption, wheel position, rotation and speed as well as a myriad of other sensors which check things like braking, temperature and so on.

The top priority for the AI system is to plan our car’s movement - the direction to go to get to the target location. This is a complex process that involves an enormous amount of real-time data, calculations and adjustments to predictions along the way.

One can easily imagine the increase in weightings on some of the neurons in the neural network as we get closer to our destination.?The AI process is a useful analogy for how incentive points awarded to students, or to energy consumers, behave like the weightings in the car’s neural network.

Like our car, the weightings are responding to the incentives that drive the weighting, becoming a value marker that ultimately shows progress towards our destination targets. Good marks on a test at school, or a high score for reducing CO2 emissions, increase in value as we move towards our destination, while helping to invoke real, constructive outcomes.

Our present system of money is also an incentive but it works in a different way. As we’ve seen with the boys buying and selling in Helen’s story, this kind of value marker is measuring consumption. The money amount increases when the same goods are resold at a higher price. The more times the same goods are sold, the higher the cost to the final buyer of the goods. Money then is actually measuring the consumption of value.

In the self-driving car analogy, this is the consumption of fuel products along the way. It is the cost to the final user of the goods – the self-driving car. The purchased fuel’s value is consumed as the goods are used up during our trip to the destination.

Clearly, if money is measuring the consumption of value, then it’s destination as an incentive is always going to be towards zero value. But is this really useful?

What we are only just beginning to understand is that this desired target of increased consumption – what we call GDP or Gross Domestic Product - is rapidly eating into what remains of our only reliable Store of Treasure – the Earth.

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?copywrite “Incentives for Value” Jonathan Peter April 2022

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