The Cathedral of the Bizarre

I had originally replied to Prosper's blog post by leaving a comment (which was deleted by moderators - grrrr it's there now. Take a deep breath, Mike, and relax), but found that there was more to pontificate on and kept going.

In Prosper's blog post Money and Merit: Web 2.0’s Threat to the Power Elite, Chris Larson invokes Eric Raymond's The Cathedral and the Bazaar and draws allusions to Prosper being the bazaar that will challenge the banking world's ruling elite. I find this quite ironic since, by the essay's definition, Prosper's marketplace would still be a cathedral. This is not meant as a slur since it's a practical requirement for most financial marketplaces, but there is still a ruling elite embodied in the corporate Prosper. Prosper has control of the marketplace and only Prosper can make changes. These changes are periodically deployed to the users who can submit feedback to Prosper, but the users are not empowered to directly alter the marketplace itself or observe it's innermost workings.

The critical element of the Raymond's work was that the bazaar approach empowers users when they can fully understand and then directly change the workings of the system in question, in this case, the Prosper marketplace. This model has been deployed successfully in the software world, with Linux and Firefox being two stellar examples, because full and open transparency do not topple the software development process. This is an impractical possibility in the financial realm because of legal restrictions and users expectation of some level of privacy. Prosper's lenders and borrowers are the equivalent to the masses that require the elites to make the final transaction.

This is not to dismiss the opportunities that Prosper has provided. Prosper has empowered it's marketplace users with options and information that are unprecedentedly in the financial world. They have shifted the opaque process of connecting lending and borrowers, greatly improving the financial cathedral by effectively reducing the size of the alter and expanding the seating for the community. But it is bizarre to deny that we're not in a cathedral.

To approximate the bazaar (we must accept that the legal and privacy restriction will prevent the complete transformation), it is necessary to continually spurn the previous financial thinking and abdicate power to the community, willingly shrinking the cathedral and relinquishing central control. How far will Prosper go to knock down the walls of their cathedral?