RadicalxChange and Rent-Conscious Organizing

We can harness the economics behind the COST to achieve similar outcomes from the bottom up.

Mar 21 · 5 min read

This weekend, the Panvala team will join members of the RadicalxChange movement at its first conference in Detroit. RadicalxChange is a movement to rethink property and democracy to transcend the divisions of our politics and build a society that works for more people. The clearest example of the kind of policy that the movement seeks is the Common Ownership Self-Assessed Tax (COST) proposed by Eric Posner and Glen Weyl in the book Radical Markets.

In short, the COST requires property owners to set a public price at which anyone can purchase the property, and that price is used to determine the property owner’s tax bill. Instead of holding a perpetual monopoly on that piece of property, the owner must pay more taxes than anyone else is willing to pay for that property. The COST results in a form of property ownership that is shared between the current owner, potential owners, and the whole community that spends the tax revenues. Instead of treating property as speculative assets to the extent that even empty apartments in superstar cities can turn a profit, the COST allocates property to the owners who can derive the most value from actively using it.

Implementing the COST in the real world would require building up a large constituency to push through incredibly complicated legislation at several levels of government. This approach is worth trying, but a top-down solution isn’t the only option. Instead of seeking policy changes to implement these kinds of policies by law, we can harness the economics behind the COST to achieve similar outcomes from the bottom up. To accomplish this, we need a rent-conscious form of organizing that doesn’t seek to amass votes, but directs our efforts towards collecting rents and spending them on the public goods and club goods desired by our communities.

How Panvala Works

Panvala is a donor-driven organization designed with RadicalxChange-style economics in mind. Our initial goal is to fund work that benefits the community that uses and builds on top of the Ethereum blockchain.

The key concept in Panvala’s rent-conscious organizing is to make the economic rents you pay deductible from your obligations to your community. For comparison, consider value-added taxation, a common type of sales tax. Businesses must collect the tax from their customers, but they can deduct any taxes they paid when they made purchases themselves from their suppliers.

In Panvala, businesses make donations to reduce their transaction costs: the advertising, negotiation, and other assorted costs that are necessary to make a sale. Instead of buying traditional ads or paying higher rent for urban land with more foot traffic, businesses donate to a community that has organized to deliver a better return on investment by directing customers to these businesses. It’s already common for businesses to contribute to causes for marketing purposes, but Panvala adds a twist to cause marketing: like a value-added tax, these donations can be credited to the customers themselves. For each purchase, a donating business passes on donation credits to customers in proportion to their purchases. Those credits are then treated as if the customer made them directly, just like tax credits reduce your tax bill. That is, given established norms for how much of your income should be donated to Panvala, every credit you earn while you shop reduces the amount you need to donate out of pocket. As a result, businesses can compete to redirect as much of their spending on the transaction costs mentioned earlier from advertising giants to Panvala itself, and use the resulting donation credits to earn business from self-interested members of the Panvala community. They just want to lower the amount they’ll need to pay out of pocket to maintain their status in the community.

The second principle that powers rent-conscious organizing in Panvala is that if you put in work to grow Panvala, you should personally benefit. In traditional donor organizing, only people on the payroll are rewarded for organizing work. In Panvala, we want you to be able to engage in organizing work without anyone’s permission, yet still be rewarded for it.

That’s why Panvala runs on its own currency. Individuals and businesses don’t deposit US dollars or a pre-existing cryptocurrency to make donations. Instead, we issue grants of our own token to reward work that aligns with our mission. Donors purchase tokens from workers using any liquid currency, then make their donations by depositing Panvala tokens into the smart contract they came out of in the first place.

We call that contract the token capacitor, and it establishes a fixed policy for releasing deposited tokens: tokens are released with a half-life of four years. Since the total token supply is fixed and the circulating supply is predictable, organizers can have stable expectations of rewards for their work. The demand for the token depends on the flow of donations into the system, so anyone can purchase tokens, organize more donors to increase demand, and sell those tokens to make their work worthwhile.

Given these building blocks, consider this thought experiment to illustrate one possible world. Waterloo is a hypothetical charter city that collects a land value tax and an income tax. In Waterloo, individuals can claim all land rents paid on their behalf as income tax credits. As a result, every business itemizes their land rents so they can pass on those credits to attract customers.

In the cities we’re familiar with, you need to pay more money to use land that more people want. In Waterloo, instead of choosing to pay more for high demand land, your income entitles you high demand land if you want to use it. If you don’t use it, you have to pay the balance of your tax bill out of your own pocket as if you had used it anyway.

What does Waterloo look like? Who lives in which parts of the city? How do debates over income tax increases play out? What household production in your city shifts to market production in Waterloo?

We believe that the economics behind the COST are a spontaneous order: they can come about through the actions of self-interested individuals, not just government policy. Panvala builds a community where anyone who seeks rewards for their organizing work can get it, and where businesses compete on the basis of donations since individuals can deduct economic rents from their obligations. Rather than watching as the value of our scarce natural resources continue to amass in the pockets of an ossified elite, we can organize to direct that value wherever we like. Instead of being faced with options on store shelves that all mask their contributions to our twin environment and economic crises, we can organize to establish supply chains that must meet our own criteria to earn the privilege of offering donation credits to our communities. Together, we can help each individual direct value in our economy towards the ends they seek so liberal values can thrive again — not at the ballot box, but at the point of sale.

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Panvala is a donor-driven platform that rewards the work that the whole Ethereum community depends on. Become a Patron: panvala.com

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