Subject: United Linux, virtual spot markets
From: Tom Lord <>
Date: Thu, 30 May 2002 01:26:02 -0700 (PDT)

Is there a well developed theory of "contractless exchange"?

In a __contracted__ exchange, we form a contrct, at which point I
become obligated to pay you money, and you become obligated to perform
a service or deliver a product.

In a __contractless__ exchange, I advance you a little money.  You do
some of the work.  I advance you more money.  You do more
work. .... You finish the work.  I pay you a completion bonus.  Either
of us can stop at any turn without incurring a civil penalty, but
we're both long-term, repeat players in this market -- so our public
reputations matter.

Contractless exchanges are interesting because, with Internet-based
multi-payments, I can engage in a contractless exchange with hundreds
or thousands of people at once.  Conversely, multi-payments enable
transactions with _many_ participants, but practically speaking, those
exchanges are necessarily _contractless_.

If a complex, multi-party, contractless exchange is structured such
that sucessful performance by a mere _fraction_ of the participants
results in a successful outcome, then when I engage in such a
transaction, I'm engaging in a fairly _safe_ transaction.

One might construct a _virtual corporation_ -- a program, essentially,
that knows how to translate the (theoretical) price-list of a virtual
corporation's goods and services into the terms of contractless gift
exchanges in a multi-payment network comprised of the
(pseudo-)employees of the virtual corporation.  Would-be customers of
a virtual corporation would run that translation program and make
(contractless) purchases by initiating the proscribed multi-payments.
A virtual corporation needs little or no particular legal standing to
operate in this manner (it's "employees" must be suitably
credentialled by banking and tax systems; it's distribution of gifts
must be suitably accounted for and reported).

Dealing with a virtual corporation would be a bit like walking down
the assembly line of an auto plant, handing out hundred dollar bills
to the workers (who might themselves own, for example, the raw
sheet-metal), and finally driving off one of the cars at the end of
the tour.  You're not, in that exotic kind of car purchase, paying a
real company: you're paying all the people responsible for the work.
(In the case of buying a car, you'd pretty much have to _trust_ the
assembly line crew to actually give you a car at the end of your
expensive but contractless tour.)

Now, suppose that, in addition, fully credentialled participants in
a virtual corporation had the privilege of minting and circulating
_virtual currencies_.  Any productive activity that can be efficiently
shared by a fluidly evolving and widely distribute crew of workers
(e.g., maintaining or supporting a GNU/Linux distribution) can now be
made the subject of a _spot market_ for labor, mediated by a _virtual

For example, a set of allied distribution companies might invent a
virtual corporattion to take on their combined need for _device
drivers_.  Any of their employees, at any company, can write any
device driver, needed by any allied company.  In exchange for that
work, the employee's employer receives a cost-and-materials payment in
a _virtual currency_ minted specifically for the virtual device driver

At the end of each month, the allied companies can _cool_ the currency
supply of the virtual device driver corporation (by taking out of
circulation any base amount of the currency that all members hold) and
the companies left with _no virtual currency_ can then _buy for cash_
the remaining virtual currency of the companies left _with virtual
currency_: an instant and (potentially) efficient spot market for the
labor needed to create Free Software device drivers.

Why not go further?  Consumers and enterprises could be buying their 
distributions, support, and custom development _directly off such 
spot markets_.  If the markets were open to qualified volunteers,
volunteers might be able to earn a living as free agent open source
developers; open source customer suppoort staff; documentation
writers, etc.