Is there another way?

The intention is that NEMs grows out of one set of standards, decided by the consortium funding the whole thing, with multiple parties building and operating markets. Railways, roads and water piping evolved in a similar way. But do we need that one set of standards? Could a range of solutions collectively evolve into the desired level of service? Try some combination of the most frequently suggested options:

• Location search: Google on Your Phone will tell you where the nearest hotel/plumber/cafe is and contact them on your behalf.
• Widening of existing services: sites such as Expedia or Opodo sell rooms for large hotels, if they could extend that service to small Bed and Breakfasts you would have a more diverse and inclusive market.
• Gateway-sites and Bots: one, very secure, facility that allowed you to shop from multiple sites, and let you post anything you wished to sell the same way, could remove a lot of the friction in online trading. Windows Live ID is a step in this direction.

Even with all these tools working perfectly, the user is faced with problems similar to  Balkanised money supply. The disparities in standards, technology, database formatting and payment terms between sites means any user would still have to be constantly alert to the complexities of the network. That’s a drag on usefulness, trust and penetration.

In this environment the focus is on immediately profitable sectors. The battle is for dominance in standards, not pushing the overall technology into far corners of the economy.

NEMs needs to be effortless, safe and ultra low cost across thousands of sectors. That requires one database and one set of processes accessed through one interface (which could of course be personalised).

You instinctively know the denominations and values of your country’s currency. So does anyone you buy from or sell to in any sector. Your national money can be used unthinkingly for any kind of transaction, even one in which every other aspect is unfamiliar to you. NEMs needs that level of unthinking ubiquity.

So, why can’t a corporate or well funded start-up launch a service and see that it sprawls across multiple sectors. Just like eBay did? Because to do that as a public utility wouldn’t be commercially viable. As soon as users were locked in, a purely commercial system will want to raise its charges or favour more lucrative sellers.

eBay started that process in 2008 under pressure from Wall Street. In utility terms that’s akin to a water company withdrawing supply to lower income neighbourhoods to focus on more profitable supply to big companies.

Soft toys, collectables and pre-owned cars, the sort of things sold on eBay, are not critical to the economy. Resources traded on NEMs would be much more fundamental. A market that suddenly skewed itself towards one source of supply could be catastrophic.

 And, let’s put eBay’s ascendency into context. At the time the world had not woken up to the potential of Internet marketplaces, big competitors including media companies, Internet players and retailers didn’t understand what was taking shape. They sat back and let eBay grow. That’s unlikely to happen again. The minute something like eBay gained comparable traction there’d be dozens of competitors harnessing their technology, user base and brand status to launch a me-too option.

Normally that vibrancy is good in an economy. But you don’t want multiple competing currencies when you go shopping and you may not want dozens of disparate marketplaces when it’s time to buy a babysitter for this evening.

Launching a genuinely useful marketplace isn’t just about technology. Look at Craigslist to see the value of primitive functionality but a deep pool of active buyers and sellers. However NEMs is launched it needs a concentration of traders, across diverse sectors, as quickly as possible. Converting government spending to NEMs, so it is open to any qualified seller, delivers that. No corporate can match that clout.

Of course, a corporate could ask for all government spending to go through their new market, pointing to possible cost savings. But, if granted, the electorate might feel justifiably short changed if the market is later distorted to maximise operator’s profitability. Public spending should only be given in return for ongoing user protection. The final system also needs legitimacy if it’s to be universally trusted. That can be achieved by the operator having won a transparent competitive tender.

No company can create the legal framework to shape marketplaces accessing key benefits only the state can bestow. Nor do they have the incentive to self-impose the restrictions that all public utilities endure. 

If a system of e-markets is to be as useful as possible across the broad bottom of the pyramid in any economy it will need to have some attributes of a natural monopoly with none of the associated behaviours you would expect if an unregulated company achieved that status.

How important this is depends on the value placed on universal cheap/safe/ convenient access to a modern marketplace. We’re suggesting it’s no longer a nice-to-have that may or may not emerge one day. Like a stable money supply, we’re suggesting it’s now essential to a healthy, inclusive, economy. Government needs to act to ensure it’s provided quickly. Whatever system emerges must then take its chance against a better alternative being developed outside the NEMs legal framework.

•  Framework basics