We Use Rea To Develop Software For Economic Networks

We Use Rea To Develop Softwarefor Economic Networksan Economic Networ

We use REA to develop software for economic networks. An economic network is a set of independent Economic Agents who collaborate on creating and distributing Economic Resources. Traditional accounting models like the Assets - Liabilities = Owner Equity (ALOE) do not fit for networks because a network does not have a single ownership; instead, the REA (Resources, Events, Agents) model offers an independent and suitable framework.

Various types of networks have been developed or supported using REA-based software. Examples include multi-stakeholder cooperatives supporting sustainable regional food systems, pioneering open value networks, networked cooperatives enabling community-supported work, high-school fablab networks, and the Earth cooperative for a fair economy. Recent projects involve DisCO (Distributed Cooperative Organization), which practices Contributive Accounting—logging contributions to shared projects to ensure fair income and livelihood distribution. DisCOs are inspired by Sensorica's approach.

These networks enable activities that traditional enterprises cannot efficiently facilitate. For instance, they allow comprehensive economic analysis across multiple enterprises, regions, or globally, including gap analysis to ensure resource circulation, circular resource flows to promote reuse and recycling, and detailed supply chain resource management. An example is an analysis of the local farm and food economy, revealing annual losses of $168 million from production and external inputs plus $208 million spent on outside food, totaling $376 million lost to the region each year. This analysis historically led to establishing the Fifth Season Cooperative to retain more food and wealth locally.

Implementing Software for Economic Networks

The design considerations for economic network software are guided by Conway’s Law, which states that organizational communication structures influence system design. For networks of independent agents, the appropriate architecture is a peer-to-peer (P2P) system with no central authority, where each node (agent) may use different software but must communicate via shared language and protocols. The Value Flows vocabulary, based on REA and prior experience, facilitates this communication, supporting interoperability among diverse agents.

Current implementations of REA and Value Flows include centralized Network Resource Planning (NRP), with multiple forks; local economic analysis; and ongoing peer-to-peer developments such as Holo-REA using CommonsPub and other open-source tools. These systems exemplify the shift toward distributed, trust-based economic interactions. In particular, mutual credit networks are a form of economic network resembling co-created credit backed by integrity, emphasizing trustworthiness, community sharing, and efficiency.

Prominent predictions in the field emphasize that all transferable credit is fundamentally a form of mutual credit, which enhances trust and efficiency within communities. This aligns with the philosophy of REA and Contributive Accounting, which seek to organize accurate, understandable, secure, and accessible data on resources, potentially transforming traditional financial systems. Such systems could diminish the need for current monetary forms by focusing on resource exchange and accountability at a community or network level.

Further predictions note that trustlessness—like that aimed for in Bitcoin—is considered a dead-end due to its slow and resource-intensive processes reliant on global consensus. Instead, systems like Holochain and ActivityPub support decentralized transactions without requiring broad agreement, reducing energy consumption, and enabling small-scale, efficient economic networks. These environments foster trust-based, peer-to-peer resource exchanges, such as supply chains, joint ventures, and local business networks, including food, craft, or community economic initiatives.

Examples of non-traditional networks include open value networks like Sensorica, mutual credit networks, and distributed cooperatives like DisCOs, which operate on principles of shared ownership, contributive accounting, and community participation. These networks demonstrate the potential of REA-based software systems to facilitate complex, trust-based, and resource-efficient economic activities beyond the scope of conventional enterprise models. They also open avenues for broader economic analysis at regional and global scales, aiming for sustainable, circular economies that reduce waste and increase local resilience.

References

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