Reputation currencies and hybrid economies

Written by Eli Gothill Monday, 06 February 2012 16:21
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Taken from Webisteme

Reputation currencies have probably been around for a long time, but they have begun to proliferate in electronic form on peer-to-peer collaborative consumption sites of all kinds, from AirBnB to WhipCar. Reputation symbols help these platforms to function, by providing incentives for honourable behaviour, and discouraging abuse.

Their rise can sometimes be regarded as a panacea: a new way to enable gift economies to flourish between all kinds of groups which will overtake traditional markets. In this post, I want to suggest an alternative: that reputation currencies are enabling platforms in a new space, somewhere between gift economy and market place.

The introduction of reputation currencies into markets can help to make them more humane and altruistic; by contrast, reputation accounting can help to scale gift economies, at the expense of making them less personal.
To begin with, let’s start with some background to clarify what these categories mean, before going on to the main argument.

Markets vs. Gifts

Gift economies and markets are two mechanisms for distributing wealth. The flow of gifts tends to be informal, complex and to depend on an assumption of shared membership in a community, even as broad as humanity itself. Symmetry of exchange is not always obligatory: other principles such as mutuality or hierarchy may also determine who gets what. [1] By contrast, markets are characterised by formalised, synchronous and mostly impersonal transactions, governed by a principle of exchange.

The impersonality of markets can perhaps be described like this: when you turn up in a shop, as long as you have money to pay for the goods you want to purchase, it doesn’t matter to the shop-owner who you might be, or whether he will ever see you again. Having the money to pay him is enough for the transaction to proceed. It might be that the shop-keeper does in fact have a personal relationship with you, but it’s not essential for a market transaction to take place. The gift economy works entirely differently: where it predominates, relationships between individuals determine the patterns according to which goods and services change hands. Money doesn’t enter into it.


Markets, like gifts, occur in different areas of the economy, though economics as a discipline has been primarily concerned with the former, while gift economies have been studied by anthropologists. Markets encourage certain values to predominate over others: for instance, those of self-interest and materialism; empirical studies show that the mere suggestion of money changes people’s mode of behaviour, encouraging them to be less helpful or generous, and more self-interested. [2]  Gifts, as could be expected, encourage warmer feelings of generosity and kinship.

Things get interesting when market values or behaviour are introduced into contexts where the gift economy is predominant. For example, paying your partner to do the washing up, or trying to barter with an elderly person for help carry their shopping. Taking a market view of those interactions would be awkward to say the least, because it would violate expectations about how value circulates within relationships. In general, where personal relationships are strongest, the gift economy is most likely to be active.

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