But who would make the decisions?

Typically on my blog I don’t like to deal with the nitty-gritty of resource-based economies (I do that elsewhere), but felt it might be worth while having a little piece out there in the blogosphere addressing one particular issue, which has troubled me as it has troubled others. It is this: if a resource-based economy has no nation states, no political parties, no corporations and no medium of exchange, who makes the decisions? The idea that some automated process could make decisions of state, alarms people: That’s not how things are now! Humans do that work, always have done, always will do! Relying on machines or other non-human processes would be a huge, technophile-driven folly, the worst kind of scientific positivism.

So the question is a very important one, since it confronts us with our own ideas about what it is to be human and in control of our lives. Understandably, it is not an easy question to answer. But the reason it’s hard to answer is that the question itself is misleading. For example, if I were to ask: Who makes the decisions in free market economics, or crony capitalism, or casino capitalism, whatever you want to call the planet’s dominant system, what would the right answer be?

Politicians? They certainly put on a great show of making decisions, but what’s behind that show, and how much of it is real?

Mega-corporations? Perhaps, but only in part, and how do they coordinate themselves?

We The People? Not really; voting once every few years is hardly enough influence to say we make the decisions.

Consumers? A little bit, yes.

But maybe we should put all these factors together, call them the Invisible Hand, and say it makes the decisions. That is probably quite close to reality, but also perhaps at some distance from the way we mythologize the idea of leaders making big decisions, and free individuals making little decisions in their billions. Indeed, isn’t the Invisible Hand a blind miasma of various technologies enabling various crowd-behaviours, apparently incapable of true long term thinking? It is also, in a real way, an “automated” or “machine-like” process, beyond purely human, individual control. As such, what sense does it make to say the Invisible Hand “makes” decisions, in the way we think of humans doing so?

And while there is perhaps a certain wisdom in the Hand’s blindness, and maybe too a useful humility in accepting that long term planning is most often doomed to constant revision and change, it is only on paper that the Invisible Hand works this way, due to the impossibility of establishing a perfectly competitive market. In practice the Hand is not really blind, and is most definitely corruptible. Without perfect competition the Invisible Hand cannot function as theorized, serves instead the powerful few to the detriment of the vulnerable many. Only perfect competition can prevent the few from becoming overly powerful, and perfect competition is impossible. (Regarding long term planning, although a side issue to the main question, I do think a resource-based economy would be capable of this, since it would have a completely different set of priorities and built-in incentives.)

In short, this post’s question is not easy to answer, because it is the wrong question. There has never been anyone “making” decisions, nor will there ever be. There is an ongoing process of action and reaction, of various systems dynamically interacting, all giving rise to progress, change, suffering, upheaval, stagnation etc., always some mix of technology and human being. One without the other is almost inconceivable. Technology is, after all, human ingenuity made real.

What we should therefore be asking of all socioeconomic models, as one part of coming to understand them better, is how are decisions made. I here offer humbly an answer which is I think relevant to them all: Humans and their technologies jointly arrive at decisions. In monetary systems the technology we call money, in combination with government, central banks, the IMF, major corporations, as well as other technologies such as computers and database software etc., arrive at the major decisions (such as interest rates and the laws of business) that govern our lives, and steer civilization. The Consumer, by shopping, sends some signals to the listed institutions. The success or otherwise of these decisions is always open to debate – there is no such thing as perfection. Advertising influences very strongly what the Consumer does, so the Consumer is influenced by one powerful part of the status quo just outlined. “Freedom of choice” is illusory.

So who makes the decisions nowadays? Nobody does. The lion’s share of “decision making,” when you really think about it, is made by technology, a particular technology called fiat money. For as we all know, if an idea or plan does not make financial sense, it does not make sense at all. Money talks. Money decides. Money is a technology, a very human invention, not an act of god.

So the only difference between a resource-based economy and contemporary monetary systems would be the technology deployed to partner humans in arriving at decisions. With the scientific method in the driving seat, not money, arriving at decions would be a more reasonable and healthly process than the profit driven, perpetual GDP growth dependent decision making process we struggle with today. Furthermore, as much of societal infrastructure as possible would be automated, making the material side of life as transparent and smooth flowing as possible. Without the hassle of making a profit or earning a decent wage, without the endless complexity of tax law, money supply control, interest rates, exchange rates etc., the range of decisions to be made would be reduced to more functional areas, such as soil health, air and water cleanliness, energy, and providing abundance.

In a resource-based economy, only things that made sense – to the best of our ability to determine this – would make sense, as distinct from their money making/saving potential. The absence of the profit-motive, the freedom from appeasing sponsors and financiers generally, of meeting bogus, money-dependent deadlines, would mean long term thinking would more likely rise to prominence. As today, no one would make decisions, as today they would be arrived at, but as an improvement over today, priorities such as the ecosystem and human dignity would be front and center. There’s nothing wrong with that, and nothing, other than fear of our own ignorance, to be afraid of.

The main obstacle between us and mature, radical change, it seems, is the way we have mythologized ourselves to ourselves, and our reluctance to give these myths up. Putting away childish things is hard, but, I fervently hope, not impossible.

The profit conundrum

First of all, what is profit?

Economics defines it as money which accrues to the entrepreneur (or owner) after all costs of production have been paid, or, more simply: that portion of revenue he can keep for himself once he's paid all his bills. Nowadays, with corporations and the Universe's most complicated tax code, this simplified picture is rarely observable in the real world, but I think it suffices for my purposes here.

The definition implies need. It gives rise to the question of amount: how much is good? how much is enough? Of course, the more profits we earn, the richer we become, all things being equal. (That's one of my favourite weasel-expressions of all time: "all things being equal" -- all things have never been, and will never be equal.) Ultimately though, no one really needs to be rich, and therefore profits are unnecessary as soon as their amount exceeds that which the entrepreneur needs to live her life. And yes, how much an entrepreneur actually needs is also open to debate, a debate that can have no conclusion.

As I understand it, economics resolves this little conundrum by reference to the market, and a particularly heavenly form of market place where "perfect competition" reigns. In a perfectly competitive market all participants are rational and perfectly informed about price and, for example, what's going on over there at Joe's Emporium, who's trading gold over at Sarah's at what quantities, what new products are coming out next week, which are the best products, etc. etc. etc. In this beautiful world profits are kept to a bare minimum because the competition is just so damned fierce. No one can monopolize anything; the other market participants, being perfectly informed, would be on to it in a shot! Imagine that, a market of total transparency. So, excessive profits simply cannot last much longer than a couple of units of perfected time, aka two shakes of a lamb's tail. Why oh why can we not establish such a wonderful system? Well, because people are not rational, and cannot possibly be perfectly informed. It follows therefore that profits are a problem.

Why? Because money is power, or a lever to power. As I discussed earlier, monetary systems depend on money (duh!), so those who have the most money can, should they choose to do so, use it for power and shaping things to their continuing advantage. We call this corruption. Corruption and money, like scarcity and money, are inseparable. You can't have one without the other. So, because there can be no such thing as perfect competition, profits must by definition become excessive, and the system inherently vulnerable to corruption at levels of intensity that lead to cyclical and systemic collapse. I imagine this sounds familiar.

For me, a human being concerned with the ramifications of transitioning to a resource-based economy, this presents a problem. Not only do I not believe in prohibition, I believe the healthiest socioeconomic systems are those which allow their members the maximum possible freedom. Since transition away from money requires money, there will be profits; no perfect competition is possible. Therefore corruption remains a serious problem during transition, lowering the chance of success considerably.

At the moment the only suggestion I have is the redesign of money, combined with a conscious decision to set up a societal infrastructure for making money slowly redundant, is the way to address this problem. We would need a money that cannot be accrued, that "expires" in some way, as it did in the Wörgel system of pre-war Austria. But this is a very delicate problem indeed, whose solution is beyond my humble powers. It needs thorough discussion.