Peter Cochrane's Hard Drive 1997
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Who will then be a taxman?
Our economy is embedded in a capitalist system, but it has its roots firmly fixed in a past of barter. The impracticality of barter on a large scale prompted the world of coins, paper, cheques and plastic that is now dominant. This in turn may be eclipsed by electronic cash, which will see even more flexibility and convenience. Ultimately, micro-payments could rapidly revolutionise the whole concept of money, even though it is a recently voiced concept that has only been engineered at a prototype level.

But there is a new option prompting hidden trade that could build fast - bits for barter. Electronic working makes it all so easy to advertise atoms and bits for sale, and find a match in the global marketplace. Living in a village, town or city gives opportunity for a black economy of people trading goods, skills, services and assistance on the nod. However, it is an economy that will always be limited by the bounds of word of mouth advertising and communication. So it tends to be an activity between friends and acquaintances - people who are known to, and trust each other.

In this context we should recognise that banks and other financial institutions are primarily in the trust business. Their role overtook and replaced large scale barter on the basis that they provided a mediating mechanism. Money replaced pigs, goats, corn, sweat and toil. Along with this trust transition to money came the standardisation of price and the efficiency of the "haggle-free" market.

The wheel turns full circle, and centuries after the invention of money and the rise of financial houses, a new world has emerged with the possibility of a global barter economy. How much easier it is to advertise and trade on the Net. No frontiers, no barriers, no limits. All bits are potentially for sale, for more and different bits. Even atoms and services can be traded. Somewhere on the planet, someone has what you want and needs what you want to be rid of. Only the advertising and mediation process hinders this, but the agents to do it are coming. Soon we'll be able to send out the "I need this game and have these games to trade" agent. Or "I have these skills and will work x hours for this software or hardware."

The global black economy is reckoned in the hundreds of billions. Here then is a mechanism for it to get even bigger. Could it be we will see electronic trading posts - frontier style - with human agents haggling in bytes? Or will we be more relaxed in the bit world, and be driven by perceived quality and need rather than raw quantity and availability?

How do you collect taxes to support the infrastructure of a nation when no money is exchanged, or is in such small increments you cannot afford to collect it or even police the system? With micro-payments, a million transactions of 1p is bad enough, but charging VAT at 17.5 per cent on each individual exchange is impossible. Exchanging bits goods and services with no means of interception and recording is even worse. This could become a macro-economy of micro things, well beyond any fiscal process yet in place or conceived.

Peter Cochrane holds the Collier Chair for the Public Understanding of Science & Technology at the University of Bristol. His home page is:
http://cochrane.org.uk

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