Deriving a product in the new worldStarting from one person and one sum of money

Part One started from one person, one plot of land and one year's harvest and derived today's financial institutions. Part Two changed one parameter and showed which constraints loosen, which tighten and which stay the same. Part Three turns in another direction: instead of deriving a whole civilization, it derives a product. The starting point is one person and one sum of money, and each chapter adds just one user-side constraint: he has his own goals and capacity to bear losses; he cannot be present at all times; he cannot see what the agent is doing; the agent makes mistakes; trust takes time. Each constraint makes the product grow a part. Together, the five parts make a financial product that can stand in a world where cognitive labour is almost free.

1. Deriving in another direction

The first two parts asked "what institutions does this world need"; this part asks "what product does this person need". The method is unchanged: first ask what happens without it, then see what grows out of that. The part that grows solves the old problem and creates a new one, which becomes the constraint of the next step. The principles obtained in the first two parts become the basis of product design here: each new part must state which principle it rests on and which unchanging constraint limits it.

2. The parts the product grows

Five constraints, five parts

Each chapter adds one user-side constraint, and the product grows one part. Choose a chapter to see its constraint, the part that grows and the principles from the first two parts on which it rests.

"Basis" lists each chapter's principle cards; they include principles newly obtained as well as principles from the first two parts rerun in the product.

3. Summary of Part Three

Starting from one person and one sum of money, five user-side constraints grow five parts of a product. First, state clearly what is promised: promise the process, not the result. Next, write down the agreement and tiered authority, so that the agent knows what to do when the user is not present. Next, keep records that a third party holds, layered and verifiable, so that the user can see the process. Next, set up defences in layers, slow down where things move fast, and write down in advance how compensation works for each kind of error. Finally, start small, borrow costly signals, widen authority step by step on the record of kept agreements, and after an error take one step back rather than returning to zero.

The five parts do not stand alone. The promise determines what the agreement says; the agreement determines what the records check; the records determine which kind an error belongs to and who pays for it; compensation and limits determine how quickly trust can widen. Without any one part, the others cannot stand.

The five parts of a product

The five parts stack from the bottom up into one product. Choose a layer to see what the user sees there, what the product does there, and what happens without it.

The five parts are derived in Chapters 20 to 24 in turn; the "Without it" column gives the conclusions of the corresponding chapter simulators.

4. Where the principles sit

Where the principles sit

Across: the order of the derivation. Up: the year each principle was proposed. Tap a dot to see the principle and who proposed it. A principle that comes later in the logic but earlier in history shows practice growing institutions before theory explained them.

Dots are collected automatically from each chapter's principle cards. The vertical axis is split at 1900; earlier years are compressed. Several principles from one chapter are spread left to right in order of appearance. Hollow dots are principles re-examined in Part Two, drawn at the chapter where they are re-examined.