The Economy Of Plenty

Anton Sherwood (
Thu, 11 Sep 1997 18:39:14 -0700

Eliezer Yudkowsky writes
: ... Essentially, you have to get rid of money and replace it with
: a barter system. We *can* do this now because we have enough computing
: power to institute "complex barter" systems. [...]

I'll believe it when I see it.

: Complex barter is too hard to keep track of - without computers,
: heh heh heh - which is why we have money, to transform every transaction
: into a simple barter. By "money", we here mean something with artificial
: value, rather than universal units of exchange. A complex barter system
: can still have standardized units of valuation.

So you'd abolish money *and* keep it. Wonderful.
Or did you just mean abolish fiat money? No argument here.

: What would be accomplished by this? Well, one of the economic design
: flaws leading to our current problem is - more than I can finish this
: sentence with. Here's what happens. Person A, who builds widgets,
: builds 100 widgets. B through K also build 100 widgets. Unfortunately,
: there is only a market for 1,000 widgets total. But 1,100 have been built.

: The standard capitalistic reply at this point is that G, who isn't very
: good at this, goes out of business. There are only two problems: First,
: G can't get another job,

Then G is in deep doodoo anyway when widgets are made obsolete!
Why did G get into this business?

: and more importantly, that's NOT what actually happens! Instead, the
: price of widgets drops.

In the short term. In the long term, G goes out of business.
No contradiction.

: Like a brick. They trade widgets for cigar bands on a one-to-one basis.
: The result is that not even E, who's the best, can make a living - much
: less G.

You can't predict how much the price drops, because any drop may make
some other use for widgets economical, at which point it drops no further.

Can the total price for all widgets fall? I don't think so:
if the old price was $N, we know that any number of widgets over 1000
is worth at least $1000N to the buyers; if the supply of widgets goes
to 1100, they're *still* worth $1000N, so it seems to me that the price
can't fall below $10N/11.

: In an ideal world, this overproduction would simply raise standards of
: living. Really. Think about it. There are more widgets for everyone!
: Hooray! Again, ideally, food would be overproduced. So the price of
: food would drop as well. The price of everything would drop, and widgets
: would be dirt cheap, but so would be everything else, and A and E and G
: and K would all be rich.
: The problem is that production of food is out of sync with production of
: widgets. The current economy was BUILT ON SCARCITY. Everyone, everything,
: is centered on the idea that supply is always slightly less than demand.

Yeah, if "demand" means the number you get if you ask everyone "How
many widgets could you use if they were free?" and add them all up.

To an economist, demand is a (decreasing) function of price.

: If one - and only one - field shifts to a massive-supply model, that field
: suffers. It's like being the only cooperator in a world of defectors.
: You need a massive shift.
: And again, the existence of money is the problem. Not private property!
: I'm not saying that. The problem is money instead of barter. See, in a
: barter system, you can establish valuations that can outlast supply and
: demand, or at least weather the turbulence created by switching to an
: Economy of Plenty. Suppose that we declare one widget to equal one
: hamburger in value.

Price controls?!

: Now, even if there are too many widgets, anyone who's made a widget can
: still get a hamburger in exchange.

>From whom? Blank-out, as Rand would say. You wave your hands and say,
presto, a widget is worth a hamburger; for anyone who produces a widget,
there's someone who'll be glad to provide a hamburger. Meanwhile all
the hamburger-makers are scratching their heads and asking each other,
Do *you* want another widget?? Omnisciently-mediated complex barter
won't change that.

: G's widgets might rot, but that's better than all the widgets rotting.


: We'll assume, actually, the existence of some buffer, some temporary
: charitable system, so that G remains in business for at least a month
: or two - while the production of hamburgers increases also.

But why does the production of hamburgers increase?

: We can also move up to establish a futures market - even better than
: barter - for absolutely everything on the planet. Then even G's widgets
: don't rot. Instead, everyone sells 91 widgets instead of 100 - which may
: sound bad, but that's on a G-just-went-into-business model. If you assume
: a technological overproduction, 91 widgets is just what they sold last
: year. It's technological overproduction that's the problem, after all -
: population expansion is self-correcting. So everyone has an extra 9
: widgets to trade for whatever they want. Hopefully, someone besides
: widget-makers is overproducing, so the surplus can all be traded around.

If I understand you -- you cartelize the widget-makers, give each a
quota of widgets to sell, to keep the price up; and then you tell them,
go ahead and swap your excess widgets for anything so long as it's not

Result: a speculator obtains the excess widgets by barter,
and sells them for cash, undercutting the other widgets.

: Eventually, everyone overproduces,


: and those who produce the most wind up with the most of the overproduction.
: So the system has two parts, really: One, a futures market (applied to
: EVERYTHING) so that overproduction doesn't cause prices to drop, and two,
: a complex barter system - whose necessity is kind of hard to put into
: words, but... The value of a dollar is arbitrary. If a widget-future
: involves $5 a widget, the value of the contract is affected by fluctuations
: in the money supply as well as the supply of widgets. A widget-future
: which involves trading one hundred hamburgers for one hundred widgets
: may fluctuate all over the place in THEORY, but in practice, one hundred
: hamburgers are what the widget-maker will eat this year. In other words,
: the universal futures economy is very vulnerable to inflation, which a
: complex-barter system will stop.

Drop the neo-communism and stick to reforming money.
You're onto something there. What if money is *defined* as futures?

Have you read anything on competitive currency?

Anton Sherwood *\\* +1 415 267 0685 *\\*