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October 31, 2005

Identity, Reputation and Social Currency

Public reputation is another element of the commons, and the internet has found a creative way to maintain it in the cyber age.

One of the great “discoveries” of the Net over the last decade has been the power of rating systems in affecting trust and the willingness of people to make purchases online. Yet the power of rating and reputation systems were not so much invented on the Net as “revealed,” because rating and reputation system are a natural and universal artifact of all forms of human cooperation.

Reputation systems are an especially important aspect of social cooperation because they are attached to an individual and form the basis for whether they can be trusted and accepted. A reputation is really the collection of tags that are assigned to an individual or entity to reflect assessments of their competence or status within a specific social network. Given that individuals play different roles in social networks – they can serve variously as connectors, gatekeepers, truth-tellers and enforcers – reputations are tied to roles within social networks.

In eBay, for example, a seller acquires a reputation score given to them by their buyers. Different reputation score levels not only make it more likely that others will do business with them, but it confers a certain status among other members of the eBay community. To encourage participation, many online games depend upon accumulated scores, levels, roles and ratings of players. So do many peer production undertakings such as Wikipedia, Slashdot, and open-source software development.

Reputation systems are, in fact, linked to all aspects of human endeavor – sports with its performance statistics, education with its grades and degrees, social standard with its board and club memberships. Credit scores are a familiar type of reputation system that is now integral not only to receiving credit, but to participating in society and the economy at large. Credit scores are based upon financial behaviors that are thought to predict the likelihood of default or late payment.

It is not difficult to see how important reputation tags are in small traditional societies where once a reputation is acquired, it may be very difficult to change. Honor-based societies depend upon reputation tags as the principal governance mechanism for defining and enforcing a social order. “Honor killings” of a daughter or sister in order to preserve a familiar reputation suggest the power of reputation in Human Nature. Even in online communities, reputation tags are the motivator and governor of behaviors. People take seriously the reputation scores of an eBay seller/buyer, the accumulated scores of a player of online games, or the number of friends and ratings one has in the online social networks of Linkedin, Orkut, Friendster, Facebook, or My Space.

Identity is not something that can be self-defined. It is granted and modulated by one’s roles, relationships, and reputations in a variety of social networks. One’s identity (whether it be an individual person, group or organization) is closely tied to reputation tags and roles in social networks. How you see yourself depends upon how other see and rate you.

Reputation tags affect an individual or group’s ability to participate within and across different networks, thereby becoming the basis for granting/revoking certain privilege and decision rights. Since reputation tags can be measures of competence by a socially credible third party – e.g., religious, educational, financial, political, trade or professional institutions – they play a very powerful role in governing social mobility and enabling/thwarting interactions between different social networks. By providing information about information – who or what it is, where it came from, as well as marking the rights and privileges for accessing, exchanging, altering, or forwarding goods, services and information, tags are the true control points in self-organizing networks.

The universal propensity of all human beings to exchange information, services and goods, and implicitly and explicitly calculate their social and economic “debts and credits” with one another, is very likely an innate, highly evolved social emotion. Adam Smith correctly saw this propensity to “truck, barter, and exchange” as a primal impulse for the division of labor and specialization so essential for efficient production:

The division of labour, from which so many advantages are derived, is not originally the effect of any human wisdom, which foresees ad intends that general opulence to which it gives occasion. It is the necessary, though very slow and gradual, consequences of a certain propensity in human nature which as in view no such extensive utility; the propensity to truck, barter, and exchange one thing for another.

A social currency is the reputation score an individual or entity acquires in a particular social network that credibly reflects their value in that network. For example, like a monetary currency, the value of a social currency may be set by the demand that an individual in a given social network can command, as in some kind of supply and demand calculation. Yet the calculation may also reflect a more subtle calculation of value based upon peer ratings of performance that cannot be captured in measures of supply and demand.

Different social networks have their own social currencies reflecting their reputation and membership rules. Highly proficient members of these networks – those who know how to truck, barter and exchange – can accumulate their own form of social capital – i.e., favors, obligations, goodwill. In many cases, they can convert one social currency into currencies in other social networks. For example, success in sports is often convertible to success in politics, business and entertainment. Likewise, social currencies accumulated in a business network are generally convertible into the currencies of social standing and political credibility. The more open and diverse a society is, the greater possibility for social mobility – something rarely possible in closed, traditional societies.

Social currencies can play an important role in the ability of a society to navigate between chaos and order, and between innovation and stagnation. One of the enduring insights from evolutionary biology is that the more innovative and adaptive self-organizing networks are, the more able they are to straddle the poles of excessive order and excessive disorder. They can stay in this “sweet spot” and be maximally responsive to the novelty of their environment.

Social networks, even at differing scales of complexity, are no different. Social networks that are isolated can become hyper stable and stale and easily fall victim to those social networks that have evolved a rich diversity of roles and responses. The historical record is replete with examples of insular societies capitulating to more flexible forms of social organization: the Incas and the Spanish, the Britanni and the Romans, the Cargo Cults of New Guinea and the West, the Chinese and the West.

When the imbalance between the new social network and the traditional social network becomes so extreme as to deny the old order any viable response in it own terms, then there can be a regression to imaginary responses and fantasies of reprieve from resurrected ancestors. Known as Millennial Movements in traditional societies, these were especially prevalent during the 19th century, when Native American Indian cultures were under so much stress from invading settlers. Yet Millennial Movements are not limited to pre-modern societies, but are indicative of the incapacity of any social network to adapt. They are an important component of the logic of fundamentalist religious narratives, whether Catholic, Protestant, Hindu, Jewish or Islamic.