What banking teaches us about virtual worlds, and the other way round

My social web life seems to go down the drain because of the banking crisis, which makes me work day and night covering the endless stories of banks going bust, regulators and politicians scrambling to save them, the doom and gloom spreading and making consumers and investors extremely nervous.

It makes me aware of the fact that connectedness has its idealistic, hopeful face, like one can experience in the online Connectivism course but also a more ugly face, of spammers, griefers, online communities which seem to deal in hatred and stupidity.

Relating this to virtual worlds, I think there are some interesting similarities between banking, society at large and virtual worlds and communities.

Banking is an activity which is extremely connected. Long before people started talking about web2.0, social networks or even the internet, finance professionals linked up all over the globe using telegraph, phone, spreading information through private networks or monitoring wire services such as Reuters.

Not only good ideas spread through those networks. Also toxic financial products, like repackaged dodgy loans, travel at the speed of light. Dubious financial practices originating in the US end up in Europe and Asia. Reckless over-leveraging in Europe affects Wall Street etc.

These days virtual worlds such as Second Life seem very real when they enable people to collaborate on real life projects while banking institutions, which once seemed to be very real and solid with their marble buildings, seem extremely virtual.

Virtual is, as always, not the same as unreal. A bank typically is in the business of collecting your savings which you can ask back at short notice while financing consumers and companies for the longer term. This works out fine as long as there is no run on the bank - as long as the customers do not ask their money back all at the same time.

In society there is a degree of trust which makes it possible for banks to function properly. However, greed and reckless behavior, inspired by the fact that those taking huge bets can win a lot but do not lose a lot when it goes wrong (others will pay), can lead to that trust breaking down. The virtuality transforms itself in unreality.

This is not only a problem for the shareholders of the banks, or for unprotected customers. It leads to the breakdown of trust between banks, between banks and the customers, between voters and governments, it ends up by threatening the social fabric of society. Remember the Great Depression and the consequences in Europe, finally affecting the whole planet.

All this does not come as a surprise for people active in virtual worlds and virtual communities. Our worlds and communities are based on reciprocity, on collaboration, on some basic trust that when we log in again, our virtual worlds and goods will still be there, waiting for us, and that the avatars we collaborate with will still be there or at least keep contact using the many electronic social networks.

Whether we talk about banking or about virtual&web2.0 collaboration, it is trust and reciprocity which are the real assets which make our societies flourish. Destroy those assets, and we end up in a nightmare.

Roland Legrand