Can a Currency Be Backed by the Labor of the Working People?
A contributionist debate about what to put on the banknotes
By MARTIN REZNY
In communist Czechoslovakia, you could read on every banknote that the currency is “backed by the labor of the Czechoslovakian people”. What did that mean? Well, nothing, really, as far as I can tell. People sure worked a lot, as everyone who was able had to have a full-time job, but within that system, it wasn’t really making the people or the country any wealthier.
The reason I’m bringing this up is that during our second working meeting with Luke and Nova about what we now provisionally call Project Contribute, we have mostly ended up debating about the issue of compensation. As none of us is very enthusiastic about using the existing largely world-destroying currencies, we decided to invent something new.
We quickly agreed on the basic idea that it is contribution that should be compensated, and therefore in some way serve as the basis for our currency or credit system, but that brings me back to the titular question — how do you base a currency on people working? It is a kind of idea that the socialist regimes toyed with, but never really figured out. Like at all.
For starters, forcing everyone to work didn’t result in more productivity, but instead in more “bullshit” work. Put simply, if you generated a new unit of money every time a worker works for an hour, then everyone would be motivated to put in the maximum possible amount of hours, regardless of whether they can actually contribute anything of value during that time.
For that reason, we decided that while you want to motivate people to put in some hours, a) time worked must be only one of multiple factors, and b) there must be diminishing returns the more hours you put in. Following modern research into productivity, most people are the most productive for only 3–4 hours a day, meaning the first 3 hours have the most value.
Let’s say therefore that one unit of the currency or one share could be generated when somebody puts in the first three hours, and then proportionally less is generated for additional time worked per day, assuming the project is a full-time one. For our volunteer project, the expectation would actually only be 3 hours a week, averaged monthly.
However, this is still just about people working, without any way of accounting for how valuable that work is by any standard. In capitalism, the value of anything is simply determined by how much money someone is willing to pay for it. The issue with that is that the more money one has, the more money one can make (take from others), resulting in infinitely growing inequality and monopolized power. Money takes over value.
In the case of our project, it would be like a bunch of major investors swooping in, who would only care about maximizing the return on their investment, which would make the people who contribute actual ideas and work effectively lose control over the direction of the project and retain only a fraction of the value they created. This is pretty much the substance of the early Marx’s critique of capitalism. Not an easy problem to solve.
Whether you look at investors who become shareholders as job creators, parasites, or anything in between, there’s clearly something missing in the standard capitalist mechanism that could make sure that money is only used to create real value, and never to create more of itself by destroying real value. In capitalism, money often becomes the goal, instead of what it should be — a tool toward the real goal of economics, production of goods.
To those who act in bad faith, money may be a tool of achieving social control, but to those who act in good faith, money is supposed to be a tool to help get more of needed and desirable work done. That’s why we believe we should try basing it on a good measure of that. What one bases the currency on, that’s what’s being the most incentivized to happen.
Base money on mining gold, oil, or algorithms, and guess what, people do a bunch of mining that wastes resources and invade and rob other cultures. Base it on speculation, and guess what, people focus on hyping the currency up so that they can pump and dump it. Maybe if the currency is based directly on work that people agree is productive, or which can be objectively determined to be productive, people will get more productive.
In socialism, there was no making sure that the work is productive, in fact the opposite happened. In capitalism, customers deciding how much something is worth is a better measure of whether something was worth doing, but ultimately, customers value what they want for purely subjective reasons a lot more than what’s objectively needed or objectively better.
So, how can we determine, as objectively as possible, what work is more or less productive? Let’s look at a typical example of a consumer good, like an electrical appliance. What are the objectively good attributes of, say, an electric kettle to a consumer? Is it better if it’s safer, or if it’s more likely to harm the user? Safer is better, of course. Is it better if it lasts longer, or has to be replaced sooner? Lasting longer is better, of course. This isn’t hard.
The reason why it feels hard in our current economic system to make things objectively better is that the system is in some ways fundamentally based on maximizing things that are in fact bads, not goods. Anyone who tries to make an objectively better consumer product will likely go out of business because in order to maximize profits, one has to maximize consumption. Consumption is an objective bad — it means burning the world down faster to get more than we need of crappier everything.
Now, if you let the customer make the decision of what value something has in the moment of purchasing it, they’re not going to think these things through. Also, customers can’t even choose good products that don’t exist because anybody who tries to make them immediately goes bankrupt. Maybe how much currency is issued to reward a producer of a product should be based on how good the product is by reasonable standards.
At our meeting, Nova brought up his idea of notes of wealth, and if I understand it correctly, it is something along these lines, meaning money not being based on debt, but instead being based on actual value created. There may be complicated mathematical implications to the mechanics of such a currency that we haven’t worked out yet, but I believe this is a general direction of thought worth pursuing. We could try valuing good.
As for the purpose of investors in such a system, imagine an investor who doesn’t invest into a project to maximize profits, but to annihilate the need for money in the future. Normally, one invests money to get more of it back to keep up with inflation, or needing more money in the future. In principle, money is a tool needed for managing scarcity, as anything abundant is for free. Investing into abundance makes money less needed.
Following this logic, investing 10% of your money is exactly equivalent to a situation in which you have decreased your need to pay for things by 10% in the future. Except in the latter scenario, the world is better than in the former scenario, because what you have helped to do is save extra 10% of everyone else’s money as well. Again, maybe valuing things that are good more than things that are bad is what economics should be based on.
If one makes a lot of our money by contributing to a project that makes sure that clean water, food, shelter, and energy become as abundant as air for everyone, or in other words, something that nobody needs to purchase, then all of the money they made can be used to purchase the remaining scarce things, or what we would now call luxuries or privileges. We only need to make sure that investment by any individual is capped, so that nobody gets an overwhelming level of control of the system as a whole.
In general, I think this may be how you would transition from where we are now to the economy of something like Star Trek’s Federation. Money being rooted in genuine contribution is the kind of social credit system that could function as a full-fledged economic and financial system in a society in which goods are highly abundant. Or, rather, in a society which is focusing on increasing the abundance of goods (as in things that are good).
Who knows, maybe there are technical reasons why this wouldn’t work in practice, but it seems doable, and it hasn’t really been tried. It seems we will literally try everything before we try doing the most obvious and reasonable thing, which only has the downside of not leaving room for cheating to make profit without actually contributing. I really think it’s not that hard to get overwhelming worker and customer consensus on goods.
After all, workers are customers. Strange how in capitalism, customers unwittingly screw over themselves as workers, and how in socialism, workers screw over themselves as customers. Maybe we just need to realize that we are making things for ourselves, and that all money we make without actually contributing is robbing us of value. What do you think?
