It just dawned on me, that every contract should have a net value, and therefore, some equity value. Specifically, posit a contract between parties A and B. Even if there are no payments or other financial deliveries, if the contract is economically meaningful, it will provide for rights and obligations. If the contract is voluntary, then the value of the contract to each party should be greater than zero on day one, otherwise they wouldn’t have entered into it. This is already a deep fact of economics, since it necessarily implies value creation. That is, the parties are by definition better off than they were without the contract. And this is something I discuss at great length in my book VeGA, which is that crime is literally a net economic loser for society, since it undermines voluntary transactions, thereby creating suboptimal outcomes, and probably outright losses.

There is however a separate point, that can be thought of as a function of secondary markets. Specifically, it is possible for either of A or B to assign their rights in the contract, or have someone else assume their obligations. As a consequence, there should be a market price for all four of those components. Specifically, there should be a market price for (i) the rights of A and B and (ii) the obligations of A and B. As a practical matter, secondary markets exist only for financial contracts, but there’s no reason why such a secondary market should be limited to financial contracts. As a general matter, if party A is e.g., unable to perform its obligations, there should be a market where A can offload its obligations. This is a generalized version of a futures contract.

This could be achieved through standardization of service contracts, and a legal system that allows people to substitute fungible services. Block Chain platforms are probably a decent candidate. There are of course cases where you would not want to allow substitution in this manner. For example, if you’re buying a bespoke suit, or other product of fine art or artisanship, you simply don’t want a substitute. If however, you’re having your apartment painted, and two vendors are certified as fungible, it’s at least possible that the superficial uncertainty of having an unknown third-party paint your home, would be offset by a robust secondary market, that would potentially create superior pricing.

You could even allow for speculators in these types of markets, if you e.g., have cash penalties for failure to deliver services. Just imagine having a contract to have your house painted, and that contract was issued by a speculator that has no ability to actually paint your house, and instead assumed they would be able to offload the obligation to some certified third party painter. If they fail to find a painter in time, they’re hit with a cash fine that is paid to you, and is adequate to make up for the inconvenience. Will everyone want to participate in such a market? Maybe not, but you can already see that it will create competition on price, because of speculation. At the same time, speculation can cause all kinds of other problems. The net point being, that careful consideration of the economy could identify potentially useful applications of this type of generalized futures contract. If I had to bet, I would say food delivery services (including commercial scale production), home appliance delivery, and other already-fungible goods and services will probably work.

Corporate events alone would probably create a market in big cities, since you don’t care about the particular foods served, you care about the delivery date, the quality, and the number of people it can feed. This will allow for “cheapest to deliver” concepts, which you find in fixed income markets, which will certainly create opportunities for speculators to make money. In the worst case, you have to “fail to deliver”, the other side of the contract again gets charged some penalty rate, which is paid to you, which in a big city, will allow you to order food for delivery right away.