Supporting a new value-based economy
Kenneth Kopelson
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A value-based economy is one where currency is created and introduced into the economy at the time of payment for services rendered for governmental/societal projects. Without computer technology, this would be virtually impossible. With computers and the Internet, however, this becomes viable.
The benefits of introducing currency in this way are many. One of the main benefits is that it will no longer require guesswork on the part of some reserve bank to determine how much money should be minted. At present, the banking system must try to divine how much currency to "print" based on all kinds of complex and inexact methods. Currency is then created when loans are written for bank customers. The control mechanism for this is interest rates, on the idea that you can induce people to take loans or not simply by lowering or raising the interest rate.
In our current system, money is created first, before any value is actually created. That is what makes it a loan, and that is also what requires interest to be paid.
A value-based economy works opposite to this. First, value is created by people working on governmental/societal projects. Then, on a fortnightly or monthly basis, the workers get paid, but instead of their pay coming from government coffers, the money is e-minted and deposited into the worker's accounts. In this way, the printed money is NOT a loan, and therefore required no interest to be paid.
When the money is created, there are two entries made in the government books. On one side, you have the e-currency that was minted. On the other side, you have the create value that the money represents.
So, why is this philosophically a good thing to do? The worker gave of his life energy to produce value that benefits the entire society (or a major portion of it). The money the worker receives represents the value of that labour, and because the worker does not receive the major part of the benefit that comes from the created value, the society in general, owes the worker a redemption for the spent labour.
For example, if a man sweeps the street at night, he may be paid $100. The reason it is valid to create money to pay him is as follows: if the man swept the street and HE was the only one to benefit from the clean street, it could be argued that he should not be paid, since his labour created a value (clean streets) that only he benefits from, so that benefit is his just compensation. Because, the street sweep in fact creates a value for many people (all who enjoy walking down clean streets), the society in fact owes the street sweeper MORE than the direct benefit of the value created. This MORE is reflected in the $100 created and paid to the worker.
So, on one hand you have $100 more currency in the economy, and on the other hand you have clean streets for the entire city to enjoy for some period of time (24 hours let's say). This is what allows the economy to balance, and the money to retain it's value...in other words, no inflation.
Once the created money is in the economy, it will then flow between private parties. In this context, the value created by labour is private in nature. The currency will flow between parties, serving as a medium of exchange.
Because money is ONLY created when projects are done and services are rendered that benefit the entire society (economic zone), it then becomes possible to operate a government without charging any taxes. A taxing system is one where the individuals pay a portion of their life energy for the operating of the government. With a value-based economy, taxes are not charged for creating value, instead taxes are charged for lost value as a way to rebalance the system after a value loss occurs.
What I have described here is a system of economic forces that are designed to:
1) Release and encourage humanity to accomplish whatever we are capable of doing, where money is no longer a limiting factor, but rather progress is only limited by human initiative, willingness, and ability.
2) Because taxes are charged for lost value, where value is destroyed before its scheduled depreciation date, there is an ever-present pressure to make things well, and to always be improving systems and products. The goal would become: no lost value.
Kenneth Kopelson Wed 4 Jun 2014 6:43PM
Actually, Folk Economics is not what I'm describing, since my economics is very focused on incentives, which Folk Economics is not. Also, according to this article, Hitler placed little emphasis on economy:
http://en.wikipedia.org/wiki/Economy_of_Nazi_Germany
There are several points to Value-based economy that must be regarded as key:
1) It requires a banking system that create currency quickly and on-demand. I don't see this as really feasible without a solid e-currency system, which requires something like the Internet.
2) Any person who believes they can launch a project that will benefit the society has the right to apply for funding by the government. The government has a great incentive to always be doing projects and providing services simply because without them, the value of money goes down as services and things depreciate. By controlling the rate of depreciation and by constantly launching more societal projects, each economic zone's "public works committee" can precisely control the value of their currency. I think these people should probably be elected so that there is a way of getting rid of "bad apples" who don't do a good job of managing the economic zone's growth and development.
3) Because the e-currency can be minted virtually instantly, and there is no speculation about how much currency to produce, each economic zone (city, town) can have their own micro-economy. This then allows for each zone to intentionally set their currencies value in order to influence trade. This allows the price of things to be adjusted for those buying things from "foreign" economic zones, and can help all zones to compete in quality and price. It should be remembered that only the societal projects have the ability to influence the value of currency, so any carry-over into the private economy must be done indirectly.
If one thinks about the motivations that this economy creates, it is easy to see how mankind would be able to progress a whole lot faster, would be able to fully support those who want to devote their lives to things like art and other "soft pleasures", and that each community would have the opportunity and means to become whatever they collectively want to become.
My goal in thinking this up was simply to come up with a system that had a different set of incentives built-in, ones that were designed to level the playing field and allow each person to have a better chance at fulfilling their beneficial goals...and I mean beneficial to a wide segment of society.
Ryan Simmiss Wed 4 Jun 2014 7:30PM
Don't believe everything you read on wikipedia. Its a little known fact of history that the Nazis created a very successful economy, too successful..that's why they had to be destroyed. Thats what National Socialism was..you couldn't make money out of thin air like the corrupt capitalist system, you had to work or produce something of value to make money.
"Under the National Socialists, Germany’s money wasn't backed by gold (which was owned by the international bankers). It was essentially a receipt for labor and materials delivered to the government. Hitler said, "For every mark issued, we required the equivalent of a mark's worth of work done, or goods produced." The government paid workers in Certificates. Workers spent those Certificates on other goods and services, thus creating more jobs for more people. In this way the German people climbed out of the crushing debt imposed on them by the international bankers."
Kenneth Kopelson Wed 4 Jun 2014 10:16PM
Okay Ryan, thanks for clarifying that. So, what I am proposing may be similar at a fundamental level. I do believe that the "devil" is in the details though, so the actual implementation of such a system is quite important. Though I think Hitler was a monster, I would have to agree that money should not have value in itself, but should be a representation of the only thing that is truly of value to human beings, and that is our happiness, our time, and a sense of justice and fairness. Anyhow, I'm glad you are discussing this, since when I look at the whole economic/political landscape, I see systems that can be classified as bad, fair, and best. Striving for the best has always been how I like to operate, so that is what I've tried to do here.
Where can I find more information on the economics of Germany? I'd like to provide a contract between that and what I'm proposing. I'm also working on a point-by-point comparison of Positive Money and Value-base Economy, so that people can really see the profound difference, and that serve to highlight the deficiencies of the former.
Firas Hermez Wed 4 Jun 2014 10:30PM
@kennethkopelson , I think your idea is excellent, in some ways it reminds of the idea of a Resource Based Economy, reading your description of what a Value Based Economy is I think it would work as an excellent stepping stone towards a Resource Based Economy.
With your idea and with technology being used to create an abundance of resources so that everyone has access to their basic needs (Shelter, good quality food, healthcare and education) , it is possible to shift peoples' thinking from survival mode (i.e. I have to work to be able to eat and have a shelter) To Living mode (i.e. what if my goal in life and how can I fulfill it).
On a side note, have you ever come across the Venus Project? www.TheVenusProject.com , the system they advocate for is very interesting and I believe the project's founder (Jacuqe Fresco) came up with the idea of a Resource Based Economy.
Kenneth Kopelson Wed 4 Jun 2014 11:26PM
Thanks for that @firashermez ! I believe what I'm proposing goes beyond a Resource Base Economy, because what a Value-based Economy does is focus on true value, and puts the various motivations and pressures where they need to be in order to propel humanity full steam ahead. It is based on the idea that not only does EVERYONE on the planet deserve to have their basic needs met, but more over, everyone has POTENTIAL within them that deserves to be realized. Why should only a select few get the chance to fulfill their dreams, while most of the people on this planet just get to survive? We, collectively, are way past mere survival, we are fully capable of thriving and making this planet a truly amazing place for everyone to live. It is all here, just waiting for us to get our act together, and that is the vision that propels me. Forget Venus...I suggest we embark on Project Earth, and in particular, let's strive to reach a Type 1 Civilization... see the Kardashev Scale.
Kenneth Kopelson Wed 4 Jun 2014 11:33PM
By the way, i have been working on all this for the last several years. It all began one day when I looked at people working in the fields of India, and I realized that those people had brains just as potentially capable as mine...so why weren't they rising to that potential? I then started to formulate a general philosophy around this Principle of Potential, where it is flatly stated that neither God nor Nature is wasteful, so whether you are a creationist or evolutionist, the conclusion is the same: until we have a world that honors and fosters the potential in every person, we have not yet done our best. So, when evaluating various proposals, that is the criteria I attempt to apply. Does it enable everyone to become their best, without undo restriction, exclusion, or restraint?
Kenneth Kopelson Wed 4 Jun 2014 11:34PM
It's been a while since I've written in my blog, but you can read more about the foundational principles at http://type1world.org/wordpress
Firas Hermez Thu 5 Jun 2014 12:17AM
Kenneth, again I agree, thinking about all of this on an abstract level, the goal would be to create a system were people are given the tools and resources to reach their full potential (if they choose to) instead of trapping them in a system where the majority have to keep on chasing a carrot on a stick.
With regards to reaching Type 1 Civilization, from a technical prospective we are well underway, the main barrier to reaching that is old style political and economical thinking.
I would suggest looking in depth at what Google, SpaceX and many others are doing to take us in that direction.
So with all of that out of the way, how could we set things in motion in order to put a plan in place which would achieve the above goal?
I also have been thinking about these ideas for a very long time, myself and many others think that a combination of altruistic thinking and technology could lead us in that direction.
Right now, Technology is driving us towards a Zero Marginal Cost Society which I think is a very important stepping stone towards our societies' ability to adopt a new economic model (be it VBE or RBE or something else).
On that note I suggest watching Jeremy Rifkin's excellent presentation about the Zero Marginal Cost Society.
The way I see it, the following technologies will start to disrupt the status quo in a very visible way within the next 5 years.
- Highly efficient Solar Power Generation
- Self Driving Cars
- Artificial Intelligence & Robotics
- 3D Printing
- Synthetic Biology
- Nano-Technology
Products and services which are soon to emerge from the technologies above will change the way we live our daily lives, many industries will be disrupted , consumers will turn into prosumers and as a result the current economic system will need to be updated or replaced.
This will all happen without anyone doing anything on a political level, However! If we could put in the policies and systems in place to accelerate and smooth this transition as much as possible then we will be in a very good position as a society.
Kenneth Kopelson Thu 5 Jun 2014 12:38AM
@firashermez Thanks for all that! Excellent points, and right in line with the way I've been thinking for some time. I love Jeremy Rifkin! I prize the book "Empathic Civilization" :) Sounds like you and I should have coffee sometime to discuss all this further. It's not easy finding people who are on this wavelength...though I'm hoping that others in the IP will be keen to get on board.
Ryan Simmiss · Wed 4 Jun 2014 11:42AM
What your describing is the 'Folks Economy' that Hitler created. It was very successful, and the main reason he was so popular.