The truly fascinating part of this story is the need for strong, enforced Social Capital for such peer to peer lending to work. There are few places in our world where social capital is still alive and well, and we generally tend to consider these places somewhat 'barbaric' (ie tribes in the middle east where if you fail to repay, you're murdered, or dismembered- not pretty stuff).
Shirkey explores the idea that sites such as prosper are bringing back social capital. My instinct is social capital will be a critical concept if we are going to collaborate and share and support each other in a sustainable manner, but I'm curious to investigate more....
Posts
On behalf of Dr. Petzel- our resident economist:
ReplyDeleteYou should look across the Baltic at another example of social capital. The oligarchs of Russia derive a significant part of their excess returns from social links that either start or become imbalanced. Balance is the magic ingredient that is needed to maintain virtuous social capital relationships. Lacking that, there is a human tendency toward exploitation. The remedy to any imbalance is not a lecture to play nicer, but the potential for competition. This does not have to be impersonal competition, but could be competing forms of social capital relationships. Be cautious of calls for exclusivity.