Has money had its day?

BOOKS: We need a new way of measuring worth based on reputation, argues Joshua Klein, the author of Reputation Economics. However, reviewer Carole Stone doesn't quite buy it.

by Carole Stone
Last Updated: 09 Dec 2013

Reputation Economics

Why who you know is worth more than what you have Joshua Klein

Palgrave Macmillan, £17.99

I've spent my working life bringing people together and I know a lot of people, so I was confident that I'd find it easy to write a review of Reputation Economics. I was wrong. This book is definitely about more than who you know.

I was particularly looking forward to the first chapter: What is your mother worth? That's not a trick question. Klein assures us it is 'a serious inquiry such as you might be asked by a life insurance adjuster or a retirement community manager, or even a Mother's Day gift card site.

The question assumes that all the elements of our lives that play a part in any human exchange - your values, who you know, what resources you have - can be boiled down to money alone.'

The truth, says Klein, is that 'you can't just price love or happiness or loyalty; it's incredibly difficult to quantify relationships.' I can go along with that: I was devoted to my late mother; to me, she was indeed invaluable. Klein proposes, instead, quite a different way of judging what things and people are worth. It is reputation that matters: it's 'the closest thing we have for facilitating transactions'.

I was heartened by Klein's suggestion that money isn't everything. People judge your worth by a host of factors about you or your company other than money. Reputation economies don't require financial systems to operate. That, says Klein, is eye-opening to most, and threatening to many.

As we have realised this year with the revelation of so many millions of military and defence secrets on the internet, our lives are being shaped by forces we don't even know exist - not just by government but by commercial snoopers.

They monitor our behaviour and habits and, on the basis of what they find, predict our future behaviour as consumers and charge us accordingly. Against the mighty computers and their programmers we seem largely powerless. But what if we could harness the power of these new technologies to empower the individual and not give global corporations all the best tunes?

According to Klein, a hacker and a consultant for the FBI, the CIA and Microsoft, we can: 'The influx of powerful new methods of computer intelligence, sensor networks and social platforms is just beginning to shake the world of financial commerce in favour of a more human form of control and currency - reputation.

' It is Klein's view that we have to stop thinking of money as the only way to exchange value. 'As a means of exchange, reputation exceeds financial methods in terms of potential return,' he says.

I can understand this. The company where I now work - an international online market research agency - provides global and local reputation research support for governments, blue-chip companies, NGOs, think-tanks and smaller businesses.

Progressive organisations know how important reputation is. It's the new mechanism of exchange. It's like money, only better. We were wrong to have assumed that money is the only way to exchange value.

Take Amazon, for example. It had always assumed that customers were buying from it because it was cheaper than the high street. That was wrong. Research showed that what really appealed to Amazon's customers wasn't price, it was convenience: it was far easier to be sitting in front of the computer or using a smartphone to order something than staggering down some far-off superstore aisle.

I have no quarrel with most of this, but when Klein argues that reputation is the fundamental mechanism of exchange, I feel a bit restive.

Do we really want to abandon money and rely entirely on swapping goods and services? Didn't we invent money because it saved us the trouble of having to bargain every time we did business over how many apples we could exchange for how many pears?

I understand that while cash is one medium of exchange, one kind of bargaining chip, reputation is another. People shop at John Lewis because they think the after-sales service and the quality will be good, not because it's cheaper.

I accept that my buying decisions will be based not just on the sticker price but on what else I know about the product, and the companies making or selling it.

Somehow, I don't see us abandoning money; it's just too convenient. But I do welcome the possibility Klein puts before us of a new era of exchange in which reputation, rather than money, is the strongest currency of all.

- Carole Stone is chair of the external advisory board for YouGov Cambridge.

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