Prerequisites for Utopia

Two smart men in the 1950s proved that a free market is the most efficient way of distributing resources in an economy, it is called Arrow-Debreu model. But it had a catch, actually a lot of catches, their model only worked if nine impossible assumptions were valid. I view these assumptions as a challenge, if you want to set up a utopia then you better try to approximate these assumptions as best you can.

I’m using this as a guiding principle while I envision a new system for building cities based on the Homecube construction system. I’ll give a one paragraph overview here filled with links you can follow for more information. This city won’t just provide the living spaces for people but also the bulk of the whole ecosystem of factories needed to support these people. This city is built upon a platform in the ocean with every cubic meter of space above the platform separated into its own voxel (volume pixel). Once a year anyone can bid in a transparent auction a price to rent out that voxel for a fix time period, with leases for voxels on the surface lasting one year and voxels deeper down lasting longer^. The voxels can be used for any purpose including residential, retail or industrial. Currently factories are not very space efficient but if they use a Factory on a Sheet design then they would have a much smaller footprint. It is also possible to run such a society non-violently.

Let’s go through most of the assumptions Arrow and Debreu make in their model to see how this kind of city combined with other technological developments that are already happening can improve over what we experience today in society.

Assumption One: Complete Markets

Imagine a super store where you could literally buy anything that could possibly affect your life, now or in the future. That is what this assumption requires, as I said before these are impossible requirement in reality. However, we will approach this limit as the the floating platform city becomes larger, since they will be able to support more and more complex factories which can manufacture more and more varied goods. Homecube floating cities can achieve much higher population densities and total population sizes than cities constrained by geography can and so it will much better approximate this assumption. Factory on a Sheet also helps by reducing the cost, size and complexity of factories making it cheaper to make things and easier to make niche things.

Assumption Two: Perfect Competition

This basically means avoiding the situation where you have monopolies. Monopolies can be enforced by governments through providing patents, public institutions and regulating away competition. It is possible to remove all of these factors from a Homecube floating city. Creating regulations requiring interoperability would undermine monopolies enabled by network effects, such as Facebook’s monopoly. Furthermore if a culture developed where consumers changed their purchasing decisions to support open sourced products then that would also enhance perfect competition and thus benefit consumers.

Assumption Three: No Externalities

By privatising the entire volume into voxels and having strict regulations about the boundaries of these voxel clusters, entities will be able to capture all the externalities, both positive and negative, into the price of their products.

They can’t dump waste into an adjacent voxel without paying for it (capturing this negative externality). They can’t make noise above a certain threshold that can be heard in an adjacent voxel without them getting sued by their neighbour (capturing this negative externality). They can restrict people accessing services in their voxels if those people don’t pay for those services (capturing this positive externality).

Assumption Four: Infinite Factor Mobility

This is the area where this Homecube platform with Factory on a Sheet production makes a massive improvement over the current system. Every voxel has a lease, after the lease ends they have to bid on the free market to keep their spot. If they are no longer making the most efficient use of the space then they will be out competed by others who will make better use of the space. The initial lease length is one year however as the structure grows so will the lease length for the voxels in the center^.

This is only possible due to the rapid modular assembly and disassembly of both the Homecube structure and Factory on a Sheet factories. Bidding for the new leases end 36 days (10% of a year) before the old leases end allowing time for people who failed to renew their leases to relocate. Just like knowing you can’t dump waste affects the way you build factories, knowing that you might have to disassemble your structure after the lease ends affects the way you construct your homes. It needs to be designed in ahead of time.

In comparison chemical plants are designed with an economic life of 20 to 40 years, skyscrapers and houses are more like 50 to 100 years. This means the Homecube floating city achieves between twenty and one hundred fold increase in factor mobility. One area might start out as a shopping centre, five years later it is ten different factories, then a residential area which gets merged into someone’s mansion, then it becomes a park next to a thorough fare all within fifty years. It is unlikely a place would change as fast as that but that is because demand probably won’t change that fast rather than it being prohibitively expensive.

Assumption Five: Perfect Information

This assumption is about making sure the customer knows everything important there is to know about the product they are buying. Important information includes the price, the quality, the availability and future information about the product. Online retail has already done a lot of the heavy lifting here for new items. If you shop online with Amazon, Alibaba, Temu or Google Shopping you can instantly compare hundreds of different retailers selling the item you want. They will tell you the price. The five star review system is a proxy for the quality. They will also sometimes tell you how many items are available. Facebook marketplace and eBay offers this functionality for used items. One of the benefits of Factory on a Sheet is to increase sensors density called sexels into objects to capture important information about the quality of used items and that will help too.

Assumption Six: Perfect Insurance

This insurance will cover all possible events no matter how small or unlikely from stubbing your toe to UFO abduction. Everyone pays into the insurance and everyone is covered by the insurance. Payouts happen instantly, the correct amount is paid out every time and no one is able to cheat the system. Furthermore this is all being provided at no cost meaning the total amount people that are paying into insurance perfectly equals the amount being paid out. The insurance companies are making 0% profit and have no operating expenses.

I think we are doing pretty well on the other assumptions, this future city we are envisioning has probably captured most of the value to be gained from them. However, I feel we are very far from this assumption mainly because the future particularly more than one year out is extremely uncertain about many of the things we care about.

Developing more and larger derivatives markets for more product types we care about, making more and larger betting markets and using superforecasters for insurance relevant decisions would all be steps in the right direction. Reducing individual privacy would also make it harder for scammers to cheat the system but that has its own cost as well.

However, no matter what we do there will always be a huge amount of uncertainty about the future. This is because it is impossible to predict future technological progress without having the information to make that technological progress happen now. So it is only after we have invented everything that we could hope to approximate this assumption and I don’t think that will happen for a while.

Conclusion

In this article I’ve tried to sketch out a city design which enables a much closer approximation to the assumptions made by the Arrow-Debreu model than our current society operates with.

Everything I have discussed is so abstract. It is hard to viscerally feel how much better living in such a society would be. Necessities and basic wants like good quality food, air conditioning, housing, health care and transportation, would all be close enough to free and have zero environmental impact that you don’t think twice about consuming as much as you want. You would consume those things the same way you consume the air you breathe. You don’t worry about your next day’s worth of air, you don’t try to stockpile it, you don’t pay anything for air, you aren’t concerned about the environmental impact of taking a breath, its there immediately as soon as you want it, almost all the time you don’t even think about it. Niche things and rare things would still cost a significant amount of money but you will be able to happily live your entire life without consuming those things. I think achieving this is a prerequisite for a utopian society.

Below is a table which summarises the discussion above. It is filled with some of the main factors that I think will improve society’s approximation of these assumptions in the future.

I haven’t covered all of the assumptions the Arrow-Debreu model requires. I haven’t commented on the rational behaviour assumption, zero transaction costs assumption and diminishing returns assumption. Let me know if you would like me to add them to this article in the comments below.

^Something like the lease length in years for a voxel is equal to the cubed root of the number of voxels that a minimum path would go through that connects it to the outside rounded up to the nearest integer. That isn’t quite the right function but something along those lines could probably work.