A site of endless curiosity

Making Whuffie in the Social Economy Or, How to be a ravenous social capitalist

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We seek a new beginning…

“We seek a new beginning”.  If you have seen the movie  Apocalypto then you know the significance of this phrase.  It refers to a new World – a fundamental paradigm shift.

A “new beginning” can come in many flavors.  In the strong sense, a  “new beginning” could mean  “a break into an apocalyptic end of the world”.  But it could also be a more subtle change.  And perhaps that change is happening now.

What could a new beginning look like? – or at least, what are the aspects of a new beginning?

The science fiction novel Down and Out in the Magic Kingdom by Cory Doctorow has gotten some people thinking.  One of the people thinking is Tara Hunt.  Tara Hunt is a writer, author, and Marketing Consultant.  Down and Out in the Magic Kingdom got Tara Hunt thinking about Whuffie.


What are the aspects of the post apocalyptic world of Down and Out in the Magic Kingdom?

The usual economic incentives have disappeared from the world. Whuffie has replaced money, providing a motivation for people to do useful and creative things. A person’s Whuffie is a general measurement of his or her overall reputation, and Whuffie is lost and gained according to a person’s favorable or unfavorable actions as judged by the community.

Whuffie recaptured the true essence of what used to be called money: in the old days, if you were broke but respected, you wouldn’t starve; contrariwise, if you were rich and hated, no sum could buy you security and peace. By measuring the thing that money really represented — your personal capital with your friends and neighbors — you more accurately gauged your success.

Here are a few more attributes of Whuffie

  • Whuffie replaces money and is a constantly updated rating that measures how much esteem and respect other people have for you. This rating system determines who gets the few scarce items, like the best housing, a table in a crowded restaurant, or a good place in a queue for a theme park attraction.
  • Material goods are no longer scarce, and everyone is granted basic rights that in our present age are mostly considered luxuries.
  • Adhocracy is a type of organization that is an opposite of bureaucracy that has replaced corporations.

Most interesting, in the new world,  anyone’s Whuffie can be “pinged” at any time by any person.  Your Whuffie is public – it is never private.

So, the new economy of significance is the social economy.  The new coin of the realm of the social economy is Whuffie.

Rich or Poor in the New Economy of Whuffie

Are you rich or poor in the new social economy?  It depends on your “capital” in these areas:  (from Tara Hunt )
At any time, your wealth can be “pinged” (made visible) by anyone
These components go into the calculation

  1. Connections
  2. Reputation
  3. Influence
  4. Bridging capital – the number of connections you have across to different industries, social strata, etc.
  5. Bonding capital – the depth of your close connections (how close and how much you could ask of your connections)
  6. Access to ideas and talent through your connections
  7. Access to resources through your connections
  8. “Potential” access to further resources (more distant, but very legitimate)
  9. Saved up favors (reciprocity is huge – which is why doing good stuff matter a lot with social capital)
  10. Accomplishments (slightly different from reputation, it is the more fungible form of SC – resumes, awards, etc.)
  11. Social Capital of those who you have relationships with (see – Bordieu’s ideas on the French elite)

The Gift Economy of Social Capital –
The more you give away, the more you have !

Whuffie, unlike financial capital (money) works by significantly different rules

Whuffie operates in a gift economy.  That is, the more (ideas, favors, bridging) that you give away the more Whuffie you get in return.  As these gifts circulate through the social community the more Whuffie they can generate for other members of the community insofar as other members of the community give away and enhance what they have received as gifts.

For example, passing a relationship through the community to someone else increases the social capital of the one who receives the knowledge and exercise of that relationship.  That relationship may be access to talent and access to further relationships and resources.  The person who now possess knowledge of this relationship has increased their social capital and can pass it on to others in the community thus increasing the total Whuffie and social capital of the entire community.

The opposite of a Rivalrous Economy

In the gift economy of Whuffie the more you give away, the more you get in return in the form of trust, respect, and reputation.  The more Whuffie you give away, the more there is within the community.  Whuffie multiplies itself the more it is distributed.  This is completely different than financial capital.  Financial capital is a rivalrous economy.  Social capital is it’s opposite.

The Convergence of Market (Financial) Capital and Social Capital

OK, so the idea of Whuffie is a fun concept.  But, it’s far more than a fun concept.  Whuffie represents something very real in the social networking world enabled by the internet and technologies the likes of Facebook, MySpace, YouTube, Twitter, and anything else that enables and facilitates connections and social relationships within a community.

How do the concepts embedded in Whuffie break into the (real) tangible of world of finance and money?

Tara Hunt’s claim is that Market (financial) capital (money) and Social capital are parallel economies.

Market capital will flow from having high social capital.


In your personal life

Suppose you were looking for a job.  All other things being equal it could very well be the case that ones accumulation of social capital can be the differentiators between you and someone else.  For example, you use your social capital as reputation, references, networked relationships,  and the ability to build a team and community to create a competitive advantage.  Your social capital can be the differentiators between you and someone else who does not possess this social capital.  Social capital becomes more important the higher up you are in an organization.

In business

Traditional marketing works by buying advertising.  No amount of advertising dollars can force a person to make a choice of one product or service over another product of service.  But, a person with social capital (respect, trust, and relationship and connections) can influence decisions.  In fact, a person with high social capital operating in an online social networked community can influence thousands, tens of thousands, hundreds of thousands, or even millions of people.  The amount of traditional marketing dollars needed to reach such audiences is beyond the reach of most companies.

Companies are realizing that they can not buy(=money economy) their way into a large audience.  But that they do have access to large audiences in Web 2.0 via social networking.  To the extent that they bring social capital to these communities the more influence they have in these communities to influence buying decisions.


Market capital and social capital will converge.  Social capital of businesses within Web 2.0 social networks can result in longer term customer loyalty which will result in more sales.  On-line communities are a strong source of consumer information on products and service that businesses can harvest for product or service innovation.  Online social communities can provide real time metrics of consumer behavior that have never been available before without expensive and time consuming “surveys” done by traditional companies.

Alternate measures of personal success (Wealth redefined)

Tara Hunt’s observation about the significant of Whuffie (social connections, social reputation, social influence, bridging capital, bonding capital, access to ideas and talent of others, access to resources through relationships, saved up favors, history of personal accomplishments, and the social capital of all those you have relationships) is only the start.

What are the other measures of wealth other than financial wealth in the market economy?

Traditionally, individual success has been measured by the accumulation of capital in the market (financial) economy.

But what are the alternative measure of success in economies other than a market economy?

  • Social capital is a sociological concept used in business, economics, organizational behavior, political science, public health and the social sciences in general to refer to connections within and between social networks. The  core idea is  “that social networks have value. Just as a screwdriver (physical capital) or a college education (human capital) can increase productivity (both individual and collective), so do social contacts affect the productivity of individuals and groups”.
  • Cultural capital refers to non-financial assets that involve educational, social, and intellectual knowledge provided to children who grow up in non-wealthy but highly-educated and intellectually-sophisticated families. Such children are often the offspring of well-educated artists, writers, teachers, ministers, and college professors, who make little money, comparatively speaking, but are socially and educationally savvy, especially when it comes to obtaining financial aid that will allow their children to attend elite private schools and universities.
  • Human capital refers to the stock of skills and knowledge embodied in the ability to perform labor so as to produce economic value. It is the skills and knowledge gained by a worker through education and experience.  Many early economic theories refer to it simply as workforce, one of three factors of production, and consider it to be a fungible resource — homogeneous and easily interchangeable. Other conceptions of labor dispense with these assumptions.
  • Organizational capital is a procedure implemented by businesses to complete work. Working practices such as Just In Time, accounts payable processes and Total Quality Management contribute to organizational capital. Buildings, equipment and vehicles are considered as capital assets which businesses buy to receive a financial return on the investment. Similarly, if a business implements new working practices or administrative procedures, its aim is to increase efficiency to receive a financial return.


Emerging in society, made visible and achievable through the internet and the social networking phenomenon, is this idea that the accumulation of social capital is becoming more and more important.  Your personal “worth” may be measured more by Whuffie than by an account in a traditional bank.

That is, personal worth as reputation, influence, bridging capital across social strata or industries, bonding capital and the depth of connections and relationships, access to ideas and talent, reciprocity as saved up favors, and potential access to further resources more distant but legitimate may become more and more what individuals are measured by.

So what is so new about this?

One could say, “big deal”, we always knew that social relationships were important.  What is new is the enabling technology of the internet that allows one to make a “local” or “neighborhood” perspective “global”.  That is, your Whuffie on the Internet is “ping-able” by any of the 1.7 Billion Internet users with access to a search engine.  At the time of this writing the internet penetration is 25% of the world population.  So, 1 in 4 people in the world can “ping” your Whuffie right now.

The future is now in some Fortune 500 companies

Leading edge global Fortune 500 companies are deploying internal social networking and collaboration systems to their global workforce.  Everyone in the corporation is placed into the social collaboration community.  Participation in the social network is measured across multiple dimensions and can become part of the criteria on which individuals are evaluated.

So, who do corporate executives pick for high profile strategic projects?  Whuffie matters. Clearly, individuals who have high social capital – able to influence people (gain commitment from people), have a high reputation (trust/integrity), have bridging capital (able to form strategic alliances among corporate partners), have access to ideas and talent, and have depth to all these social relationships and alliances are going to be rewarded.

Best thing is that you don’t have any choice in the matter of participation.  You can’t opt-out of the social economy.  A “ping” to a individuals Whuffie that returns no results – speaks volumes of that persons wealth in the new economy.


The Whuffie Factor: Using the Power of Social Networks to Build Your Business

More on the book –

Tara Hunts Consultancy-
More Tara Hunt –
and “I’ll take an extra helping of TH”  to go  –

Down and Out in the Magic Kingdom – free MP3 and text –

Video –

An experiment in the new economy…

The Whuffie Bank –

TechCrunch on the Whuffie Bank

What it takes to “buy” an audience in traditional media advertising –
Ad rates for a 30-sec spot on Television from 2007 –

Written by frrl

January 17, 2010 at 6:15 am

Posted in Commentary and Opinion

Tagged with ,

5 Responses

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  1. […] leave a comment » via […]

  2. My account is open at Whuffie Bank.

    Scot R. Morrison

    January 18, 2010 at 4:38 pm

  3. Can you tell me where to place some ads on your blog? I’ll even pay if it is reasonable? I am looking for other joint venture partners to promote my products that i created…I give 100% comissions and i only make money on the backend…If you are interested then please let me know. You can click on my name to see the product that i created and will give you and I will give you 1 of my traffic methods that pulls in 1000 visitors per month..Thanks and look forward to working with you…


    January 18, 2010 at 2:49 am

    • This site does not take advertising or generate revenue.


      January 18, 2010 at 5:37 am

  4. Wow…what an amazing and well thought-out summary of the idea. I’m definitely going to pass this along! You should have wrote the book! 🙂

    p.s. one minor thing:

    Market (financial) capital (money) and Social capital are parallel AND INTERTWINED economies. They constantly effect one another.

    Tara 'missrogue' Hunt

    January 17, 2010 at 5:04 pm

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