The Promise of a Token-Based Economy for our Left-Behind Places?

Mike Riddell
16 min readJul 25, 2022


It’s time to get radical

Conceived in Wigan, Born in Burslem

This essay is about regional economies and how we measure their success: in particular those regional economies that are loosely described as post-industrial or left-behind. Think ex-mining, ex-steel, ex-shipbuilding, and ex-Potteries.

My patch, so to speak, is Stoke & North Staffordshire, which according to experts, is England’s fourth most left-behind.

In writing this essay, you should know that what I am is a qualified valuer with 35 years experience in urban regeneration, and that what I am not is an academic. Nor am I trying to present or become one. However, in doing my best to persuade you the reader, that economic change is right around the corner, I have supported my arguments with as much research as possible. Whether we want that change or not, is what separates the ‘us’ from the ‘them’.

In a nutshell, my argument is that social capital is so important to the regeneration of post-industrial regional economies like Stoke & North Staffordshire, that it must be manufactured as a process, urgently.

And then networked into an economy that joins together all left-behind places into a sustainable business model that supports a “de-growth” trajectory.

Now is precisely the right time to unlock and mobilise the latent and stored value of social capital. In order to mobilise it, first we must measure it.

What is Social capital, anyway?

It isn’t helpful to learn that the way social capital is defined and measured is contested, but broadly speaking it can be defined as the networks of relationships among people who live and work in a particular society, enabling that society to function effectively.

Social capital is seen simultaneously as an input and an outcome. A cause and effect. Effects include “the existence of more economic development or less crime”. (Portes, 1998).

So social capital is two things at once.

It’s firstly an input. A resource that is processed to add value. For instance, if Little Johnny is a lost and lonely unemployed youngster, the act of volunteering his time to community rather than wasting it, is a process that adds value. His time is the resource and community the process. Put the two together and they have formed social capital. Secondly, it’s an outcome. Because Little Johnny has performed work the economy is better off than it was before, and maybe there is less crime on the street.

But the results of his work get taken for granted. Little Johnny’s time is a perishable commodity, which if not put to work is an opportunity gone begging. The cost is intangible because nobody counts it, yet the economy has produced less, and wasted more.

If time is a perishable resource, and if a contribution of that time can reduce crime and make the economy more sustainable, then why is the system wasting it?

Why is the system not doing more to track, measure and manage a process that could as I argue, waste less and sustain more?

Manufacturing Results

Tims is perishable, when it’s gone it’s gone. Not making the most of it is a wasted opportunity to do more with it.

Mention the word waste and people see waste of the tangible kind, the sort you tip in the bin. The waste I’m asking you to visualise, is the waste that you don’t. Intangible waste.

Empty seats on buses and in cinemas, and those quiet times at the gym or the hairdressers are all examples of intangible waste that drag on business and economic performance.

To the owners of these assets, waste isn’t an issue. Life is good, they can afford to be wasteful.

But the markets can bite. The owners of these assets — the cinemas, gyms and buses operate as service providers that employ capital equipment. For all capital equipment, the biggest cost is the cost of not working, during which interest has to be paid while the equipment does not earn. As our owners know, their main expense is the interest charged on their investment - yet they concentrate their efforts on costs that are already too low, labour being the obvious example.

They should concentrate, in other words, on the costs of their asset not being worked, rather than on the costs of it working.

Local economies are full underused resources. Quiet times at the tattoo parlour, the barbers or the physio, and everyone who provides some sort of local service such as will-writers, copy-writers, accountants and web designers. They all have quiet times that are a hidden drag on their business. By focusing on the cost of their assets not being worked hard enough, and by recognising that these resources are time-bound, valuable and perishable, an opportunity begins to emerge for a secondary market to clear this stored value, before it perishes.

AirBnB have shown us how an under-used spare room can be transformed into a new revenue source and an individualised experience for guests. Airbnb have never turned a sheet in their lives, yet they have a business that threatens the hotel industry. In 2007 they weren’t around — these marketplaces grow fast.

Imagine a localised business network where voluntary groups and business service providers could combine their surplus assets and idling resources to support each others work — to build community, unlock the stored but perishable value and in the process generate recurring and predictable revenues from an AirBnB-type enterprise model delivered via the internet?

By transparently measuring the cost of resources that aren’t being worked, the spotlight falls on those asset managers who do not perform. By measuring what matters the system can improve performance.

Results that capture the imagination

As a volunteer myself in the Cultural Squatters, Sunshine House in Wigan and now in Burslem, I know for a fact that youngsters without work would love to be valued for what they can do, rather than feeling judged for what they can’t. Working clay together around a table making ceramic coins, we enjoyed the experience of connecting, the sense of belonging, the doing of good and the making a difference. But most voluntary experiences do not pan out like this and more organisations are too bound up in red tape and risk-mitigation to curate experiences that people find enjoyable.

There is so much waste in our system; by tasking volunteers with the job of eliminating it, we can repackage volunteering as collective action activities as cause-related marketing opportunities for the business community to sponsor with their excess stock and spare capacity. A new partnership where the community takes the action and the business supports it.

Social capital is formed, at no cost to anyone.

The markets want mindful not mindless, consumers. What exists is a gap in the market and the opportunity to produce a range of goods, services and experiences that help ordinary people live a more meaningful and purposeful lifestyle.

The gap will be filled by a process of manufacturing that begins by measuring the opportunity cost.

The best bit is that the social infrastructure for this manufacturing process to begin in earnest, are already in place. By my estimation (because there is very little data) there are some 350,000–400,000 community groups, good causes and small charities that exist in the UK. Nearly all of them rely on government-funded hand-outs, or on the National Lottery.

This is a world in which enterprise doesn’t really exist, but it must.

To discover for yourself just how much those at the top value these frontline organisations, Google: “how many community groups are there in the uk”.

The top return is from the Office for National Statistics, but there isn’t an answer, which says it all.

These community-based organisations serve their members and are way more trusted than government or business. People trust people just like themselves so think word-of-mouth . The residents supported by Sunshine House Community Centre trust Barbara to act in their best interests at all times and that she does. This trust is where the value is in places like hers. Community Centres that serve vulnerable people, is a valuable place indeed. But how does Sunshine House benefit? How can Sunshine House leverage this trust to bring in an income? It can’t. Her members might value their membership and service, but the size of her membership is just too small for any brand or corporate to invest a lot of time or money on such a relatively small number of people. They always want big numbers. All around the country are similar sized community groups with similar sized problems. Some 400,000 of them. Consolidate their numbers into a membership network and then what we have is a population that very large organisations would want to talk to.

We could offer them a last-mile kind of infrastructure service. “You want to speak to our people? Fine, it’ll cost you”.

With help to onboard their members and regularise their operations they can begin the journey towards commercialisation. They are beautifully placed to host, curate and package a range of immersive, engaging game-like experiences that inspire people of all ages to participate in the quest to eliminate waste, and encourage businesses to support them.

They really don’t need to do much differently. They already support vulnerable people. They already have a network, and they probably already have a place for getting together to make a plan and decide who does what and by when.

By celebrating the individual contributions that each of our communities make to the common good, we can turn wasters into super-citizens and communities into businesses that serve, protect their members by turning them into team-players 100% focused on results that matter to them and their business clients.

A touch of regularisation here, a dash of standardisation there, and before long a caravan of love is whistling its way into work. The opportunity for our unpaid workers (sorry, volunteers) to commercialise the value of their social capital, is right around the corner.

By hosting and curating a range of experiences that incentivise collective action; by measuring the results they produce, and by showcasing the results for the purposes of digital distribution, we can systematically improve performance. And by celebrating our results, we can develop the next generation of influencers who use their socials to show the world what good really looks like.

Better than Netflix or Hollywood, this is show business for good.

Taking that product to market

So there you have my hypothetical production process for manufacturing social capital. Henry Ford, eat your heart out!

But we can go even further and faster, if we can imagine a way out of this poly-crisis.

With a relentless focus on results and their impact, a storytelling feedback loop that converts intangible waste into tangible incentives (such as cheaper bus fares) begins to emerge, one that rewards prosocial decision-making.

Remember — other than the system requirements here, so far, this idea costs £zero.

The next thing we must quickly do, is develop the generally accepted principles and standards that account for social capital, so that the production process becomes lean.

As I hope my argument begins to persuade, social capital has the amazing potential to become as valuable to individuals, organisations and communities as it could be to the economy. For individuals, social capital allows access to privileged information, provides job opportunities, and enhances skills. For organisations, social capital’s value includes gains in efficiency, market share, and performance.

But, unlike property, equities or any other kind of investable asset, no methodology exists for valuing the intangible asset that is social capital. The property industry has its Valuation Methodology known as The Red Book, the Treasury has its Green Book methodology. By measuring proof of work at its ‘Point-of-Sale’ in the community, and by digitally networking our community groups to manufacture and produce more of it, we can develop a valuation methodology for social capital. Or at least make a start.

The methodology would need to be continually improved. Here is a job for the academics. This would underpin the value and money’s-worth of social capital and generate demand that the markets would fight over. What we’re now talking about is investable asset class that converts under-used resources into tradable value — an impact investment product that produces transparent, sustainable and worthwhile returns.

London is the capital of financial capital, with its stock exchange and regulators and markets and brokers and central bank. It won’t be the social capital because it isn’t qualified enough to understand the issues faced by left-behind places.

“Value is not intrinsic — it derives from the ownership of interest”

Economically, for first movers the commercial advantage is hefty. IFC’s latest estimate of the global market for impact investments shows that $2.3 trillion were being invested for impact in 2020, of which $636 billion clearly have an impact management system in place, according to the report ‘Investing for Impact: The Global Impact Investing Market 2020’. This at a time when the ESG market is being criticised for the equivalent of green-washing.

A transparent measure of social capital enables the markets to account for returns and settle on price. When the markets can chart a direct line between the cause and the effect of an investment, we will have a healthy and succesful investment product.

Our success is measured in units of time that would otherwise have been wasted. That’s what our market will trade in.

Measuring success in this new kind of way will transition us from an old, industrial economy to a knowledge-based one. There’s still work to be done, but this work is sustainable, it eliminates waste, and importantly, it’s work that can be tokenised.

If Little Johnny’s work is signed off by a Barbara (if you know her, that’s a big if!) then a proof-of-work token can be issued by her into Little Johnny’s digital wallet.

The token certifies that a) he has done the work, and b) it has been performed to Barbara’s minimum standards.

Certification is a process that involves trust. The network trusts Barbara to issue the token for work performed that benefits the community (network) to an objective and measurable standard. She offers a guarantee to the markets in this regard, and in so doing offers a cross-guarantee to all the other Barbara’s who wish to see our youngsters grow and develop and improve as characters.

Thus, Barbara “securitises” the value of the work performed as a tokenised form of money that becomes tradable within a markets-based token economy.

Not to be confused with the hype and hoopla of cryptocurrencies, and more like Clubcard points than you might imagine, this markets-based token economy is a actually just a coalition reward programme that enables merchants to turn their surplus stock or perishable capacity into a voucher, or token, that rewards Little Johnny’s decision to work, rather than not. It’s the community’s way of saying thanks.

The token is as a money-like incentive therefore, that rewards certain behaviours. In policy terms it is called nudging. The tokens alter or nudge people’s behaviour in a predictable way.

Tesco Clubcard points are exactly the same. Points = savings. They are a form of token money that can be redeemed in the token economy that is the Tesco shop, as well as Pizza Express, Alton Towers and so on. This is what’s called a coalition loyalty scheme. Of which Tesco is the boss.

So the concept of token money already exists. Token money systems have been adopted in many businesses around the world as an effective way to exchange value between companies and customers.

Token money is predominantly used in mobile games, but is also used in the realm of e-commerce.

A network that uses token money to trade value, is an e-commerce business that combines the functionality of membership, payments and rewards with a marketplace. It’s commercially very powerful.

In payments alone, the market is exploding.

In 2020 it was valued at $870 billion and has been projected to reach $1.91 trillion by 2028.

Regional Economic Specialisation

What we can see emerging now is an operating system upon which software applications could be built to further add value.

Economic spillover effects are generated when the different sectors of a region coordinate, compete and collaborate in their efforts to meet the market’s unmet need. Once the network effect become obvious, the first-mover advantage has disappeared leaving the laggards behind.

This then is a regional first-mover opportunity, because of the value of network effects. By the time the first prototype is out there, the chances are it will be way too late for any other region to try and compete. They might as well collaborate.

One engine will suffice. One network will do. What would be the point of wasting time building something that someone else had already begun building? Better to focus on apps that add value.

A “Manage my Money” concierge service would support the financially excluded of Wigan just as much as those in Stoke and a “Manage my Health” service that links to your wearable would serve St Helens as it it would Newcastle under Lyme. You get the gist.

Business sovereignty

We have invested a lot of time in figuring out what kind of legal and commercial entity we need to support our socio-commercial aims and objectives.

The purpose of a Community Benefit Society is to serve the interests of the broader community. Legislation requires it to “carry on a business, industry or trade that is being or intended to be, conducted for the benefit of the community”. Our CBS will be owned and governed by our membership: those that issue, redeem, earn and invest in the legacy value of our token.

What makes this business entity attractive to us in particular is that we can crowd-fund our way to raising money.

Like a lot of other community groups and good causes, we’ve learned the hard way that grant funding applications are there to waste your time.

Unless your face fits (in London), you only get rejected.

A Community Benefit Society is based on co-operative rules, values and principles but is regulated by the FCA to sell shares. It provides those of us who speak the language of business with a means to raise the capital we need to fund our growth and development.

Unencumbered funding without conditions, strings or the need for a planned exit, is the dream that keeps us going.

The FCA says that “the conduct of a Community Benefit Society’s business must be entirely for the benefit of the community.” There can be no alternative or secondary purposes. Any profit made must be used for the benefit of the community. Proceeds must be reinvested back into the community.

In a token economy, every action, interaction and transaction can be digitally tracked making it possible to create a funding mechanism for community groups and good causes where the proceeds systematically link contribution to entitlement, without the need for the Theory-of-Change brigade who double-speak their way into the gatekeeping role, and sustain the status quo.

This way of doing business isn’t for everyone, we know that it threatens a certain kind of technocracy, a certain way of making a living.

But this is a co-op where membership is open and voluntary. No one will be forced to join but everyone is welcome.

Transparency, openness and accountability is at the heart of everything we do.

A system of transparent public ranking will offer our grant-funding organisations, our local authorities, our investors and our asset managers the commercial opportunity to account for their actions and inactions so that together we can sort the wheat from the chaff, face the music, and dance.

Better still, the bigger the community becomes, the better able it is to leverage its collective bargaining and purchasing power. Think energy, food, insurance, health and transport. All over-charging their customers and abusing their monopoly position. The experience of disrupting these big markets will be an immersive game like experience — a waste-the-waster model where a tokenised divi encourages you to vote with your wallet.

Pull the trigger, and smile.

Is this for real?

Something might seem quite ‘intangible’ about a business idea that makes money by manufacturing social capital. Conceptually it’s hard to get your head around, but if you’re in any kind of leadership position, it’s time you did.

Because, here’s the thing. Since the turn of this century the business world has been changing.

“Early in the twenty-first century, a quiet revolution occurred. For the first time, the major developed economies began to invest more in intangible assets, like design, branding, and software, than in tangible assets like machinery, buildings and computers. For all sorts of businesses, the ability to deploy assets that one can neither see nor touch is increasingly the source of long-term success.”

As we can see, intangible assets are assets that are not physical in nature. Social capital, goodwill, brand recognition and intellectual property, such as patents, trademarks, and copyrights, are all intangible assets. There is mounting evidence that intangible assets can help alleviate the regional disparity. Dr Saite Lu of the Bennett Institute at Cambridge University says,

policymakers must take intangible assets seriously when designing policies to address regional inequalities. Investing in human and social capital is fundamental to closing the UK’s regional gaps”.

But this is not just a familiar story of the so-called new economy. The book Capitalism without Capital shows that the growing importance of intangible assets has also played a role in some of the larger economic changes of the past decade, including the growth in economic inequality and the stagnation of productivity. Its authors have explored the unusual economic characteristics of intangible investments and how economies that are rich in intangibles, are fundamentally different from those based on tangibles.

Their conclusion is that

the managers, investors and policymakers can exploit the characteristics of an intangible age to grow their businesses, portfolios and economies.

Our conclusion is that they need an incentive.

The digitised, dematerialised, knowledge-based economy is already here and spreading, and offers huge potential to disrupt your unsustainable business practices. Whether or not Levelling Up remains as a policy objective under a new leader or even government remains to be seen, but who cares when in Stoke’s case, £50m of Levelling Up money is used to support a private sector property developer rather than help the 4 in 10 kids out of poverty?

But what the White Paper has done — as Pro Bono Economics helpfully point out is this — it recognises the importance of social capital.

A final thought for any technocrat, bureaucrat or politician looking to steal our ideas and dress them up as their own, only for them to fail yet again without you learning your lesson: any top-down way of defining or measuring social capital that hasn’t been signed off by the community, is just wasting more of our time. If you’re serious about Levelling Up, then cut a deal with us and give us the credit for measuring it.

The sooner that business as usual is shown the door, the sooner we can get our economies back on a sustainable footing.

Social capitalism might just be the future of business and governance.




Mike Riddell

I’m a local economic regeneration practitioner working on the ground in Stoke.