“How can
that be?” I demanded.
“Well, you’ve
not ordered beyond your allowance,” said Wilbur. “If you had, you’d pay for the
excess.”
“Let me get
this straight. Are you saying I’m entitled to a certain amount of free food
every week.”
“It’s a
yearly quota to be precise, but that’s the gist of it. Enough for your
nutritional requirements.”
“Judging by
what I’ve just unpacked, more than enough.” I shook my head. “And I suppose I’m
not untypical in any way.”
“You’re
untypical in many ways, Ernest, but not when it comes to your right to a free
staple diet. Didn’t you read about it in A
Free Lunch?”
“No. I didn’t
get that far. I didn’t even finish the first part of the book—the critique of
capitalism.”
“Hmm,” said
Wilbur. “Perhaps, after you finish checking your order, I should fill you in on
what you absolutely need to know.”
The order eventually
proved to be all present and accounted for, except for one packet of herbs—which
made me wonder if Wilbur’s sense of humour was infesting the rest of the dream.
“Not enough thyme?” I grumbled.
When I
finished marking the order, Wilbur said, “Now press okay to pay, and the
shortfall will be put on your list for next week.”
“With what
authorisation? Anyone could use this computer to buy something for themselves
and have it paid for from my account.
Ernest’s account, I mean.”
“Only if
they could be here when it was delivered and do a fairly convincing
impersonation of you. But no one’s likely to want to do that, even if it wasn’t
illegal, and frowned upon. There’s been a handful of cases in the last ten
years—always youngsters—and all they achieved was to temporarily reduce the
account of someone other than themselves. That’s fairly trivial.”
“Trivial!”
I said, tail feathers growing. I’d be laying eggs soon if this kept up. “It’s
theft.”
“Easily
amended, and survivable without fuss. Why don’t you take a seat, it’s time for
your lesson in free lunch accounting.”
“I’m
probably going to wish there was a seat belt,” I said, as we settled ourselves
in the sofas. Nevertheless, I felt a buzz of anticipation, seeing this as a new
chance to find the flaw in the design, the inconsistency that would prove it
all some demented dream.
“You
remember the diagram I drew,” began Wilbur, “the one showing how no more can be
spent on what’s produced or provided by work than is paid to do the work—why business
profits are zero in total?”
I nodded
briefly, trying to dredge up all my powers of concentration.
“Well,”
continued Wilbur, “that diagram is the key to modern economics—not just why you
can have a free quota of food, but also why economic growth is not necessary.
An example is probably the best way to explain it. Consider a period of say a
year. For the sake of argument and for simplicity, assume—initially at least—that
over the next year there’ll be no changes to consumption or production habits.
Basic needs and wants won’t change, nor will anyone’s employment. So everyone
keeps their jobs, and production targets are unchanged for the year. Now, go
one step further: guarantee everyone’s earnings—freeze them in place for the
year, even if production targets turn out to be met with less work than
anticipated. That way, the total cost of wages over the year can be determined
in advance, and the prices of all goods set so their sum equals the sum of
wages. Also—”
“Hold on. How do you set the prices of all goods?
You’re talking about the domain of producers. The market. It sets prices.”
“Not if
it’s been agreed to do otherwise. Remember, we’re dealing here with a decision
to move beyond a competitive
growth-compelled economic system. It’s hardly possible to do that if you don’t
abandon capitalist conventions.” He adopted a mischievous smirk, and I knew a
joke was about to be attempted. I braced myself for the worst. “A bit like
trying to learn to drive a car while refusing to step down from a bicycle.”
I smiled,
more from relief than amusement. It was anything but funny, but at least it
wasn’t excruciating. And it was a lot better than his Groucho Marx
impersonation earlier that morning. I then realised this was the first time I’d
heard him try to be funny since his
impersonation. Understandable, given the surprising turns of events and
confusing discoveries he’d been dealing with in the interim. But clearly, now
things had quietened down, he felt comfortable enough to try again. I steeled
myself against the prospect of more (and worse) to come.
“In any
case,” continued Wilbur, clearly pleased by my apparently positive reaction,
“this is the way it happened. The system started out with wage rates and prices
extant under capitalism, except that prices were expunged of profits and
adjusted so their grand total equalled the sum of everyone’s wages. So, no more
profits—instead balance between production and earnings. And guaranteed
income.”
“And was
this supposed to achieve anything? Is it advantageous at all?”
“More
advantageous than a glue stick in a leper colony.”
Caught
between surprise at the political incorrectness of the joke, and genuine if
embarrassed amusement, I rolled my eyes skyward and grimaced to keep a smile at
bay. Schoolboy humour, perhaps—offensive in its own way, certainly—but at
least, by Wilbur’s standards, a little inventive. Or more probably, given the
speed of his response, an old joke from sometime in the last forty years. Or
even more likely, I had to remind myself, something from my own adolescence,
long forgotten to all but my subconscious.
Wilbur
continued. “It means greater security for all. Farmers, for example, with an
extra good year’s crop don’t have to fear lower prices and reduced income.
Excess crops are simply stockpiled or sent to places suffering from crop
failures. It also means greater efficiency—the end of make-work. If people only
have to work as much as they need to, to actually finish their work rather than
protect their jobs, they are more likely to save
work. The first year this was attempted, all production targets were met with
only about ninety percent of the work expected. So, the following year, the
same production targets were attempted with the number of hours to be worked
reduced by ten percent.”
“But then
people would have ten percent less income from ten percent fewer working hours.
They’d lose. Or did their wages go up by ten percent?”
“No, no,
wages stayed the same, as they do almost every year, the rare exceptions being
when widespread agreement is reached that circumstances have changed enough to
make existing wages misrepresentative of the value to the community of the work
being paid for. After the first year, though, wages stayed the same, but with
ten percent less work needed, income reduced by ten percent, and prices were reduced across-the-board
also by ten percent. So no one lost any purchasing power.”
“Just like
that?!” I said, snapping my fingers. “It’s that simple?!”
“More or
less. There are many other factors that affect price adjustments, and these
have been brought increasingly into consideration over the years.” He rattled
off a long list, including trends for resource usage and availability, scarcer
fossil fuels, cheaper renewable energy, the effects of flood and drought on
food production, varying productivity changes between economic sectors,
stockpiles and unsold inventories, costs of work not directly leading to goods
and services such as research and development.
“These have
to be taken into account,” he continued, “to plan what work is really needed,
not just for the short-term but for future generations. Nevertheless, they
don’t alter the basic principle: prices change in accordance with the amount of
work actually required. If people save work, their hours and the prices of all
goods reduce by the same proportion. If, on the other hand, more work is needed,
for any reason, naturally enough people work longer, but prices also increase.
So, there’s no real inflation because prices only change in line with income.
Effectively, the business cycle is absorbed into changes to working hours. And
the supposed need for constant economic growth disappears.”
It sounded
like nothing I knew, yet still oddly familiar. “Isn’t it all just a variation
on socialist planning?” I asked. “An economy driven from above with Five-Year
Plans, or one-year versions of them at least. Needs determined in advance.
Surely, you’d need a totalitarian regime to make it work.”
Wilbur made
a sudden loud noise which, judging by his expression, was a surprised snort of
amusement, but sounded more like a bovine burp. “You never need a totalitarian
regime to make anything work,” he said, smiling grimly. “Not even what they do
best: oppression and misery, which admittedly can be arranged by any number of
alternative approaches. What is used,
what allows the pricing system and much else to work, is the opposite of
totalitarianism: an advanced form of democracy.”
I snorted without amusement, and spoke likewise
(probably with surliness). “You mean governments?! Central planning has long
been repudiated as inferior to globalised free markets. Your alleged system
wouldn’t work.”
“Ah, but it
does. Because it’s decentralised.
There’s no central planning. There’s management and coordination, at all levels
including the top, but it flows from below. And it’s unavoidable in any case,
assuming you want to avoid anarchy. Even globalisation’s most avowed proponents
advocated management of the world
economy, rules for regulating supposedly unregulated markets. Which brings us
back to the economics. You asked how your food items could be free, and the
answer is because of CAPE, Cost And Price Equalisation. If prices can be
adjusted across-the-board to balance the costs of work done, then they can also
be adjusted individually—increased here, decreased there—as long as their total for all goods produced balances
the total cost of all work planned for. So, food for example can be made free
simply by increasing the prices of all other goods.”
I shook my
head—it was not sinking in—but Wilbur recognised my confusion before I needed
to voice it. Grabbing a pen and paper, he tried again. “Let me show you a
simple example. Divide the economy into two groups of producers: those who grow
or make food, and everyone else. For a particular year, say the total cost of
all food is ten percent of the total cost of all goods. Now, with CAPE, the
total cost of all goods has to balance their total prices. But you can have the
same total prices if you make food
free and increase prices of all other
goods, by what works out in this case to be a fraction over eleven percent.
Earnings haven’t changed, and total prices still balance total costs, so
everything produced can still be afforded.”
“But you
could do that for anything,” I said,
studying the diagram and starting to feel like I understood it. “Not just
food.”
“Exactly.
And it is done, for many things.
Health care, for example, as you experienced today with Toby. Laura’s one-off
round-the-world holiday. Basic clothing, housing, education, and more.
CAPE-adjusted prices of goods now rarely equal their specific costs of
production. Only the grand totals are in balance, which allows all worthwhile
work, whether it directly contributes to purchasable goods or not, to be
afforded. People no longer even think in terms of what can be afforded. Their
concern instead is for what work is actually needed, or sufficiently wanted.
Environmental regeneration for example. Or construction of a community hall or
public road. Even international development and aid. All of it can be budgeted
for by planning for it, and ‘absorbing’ its costs into the prices of all
consumables in the same way as I showed you for food. It’s how, after years of
gradual reduction, government taxation was abolished—taxes are effectively
obtained by setting higher prices for consumables.”
“Hold on.
That’s still taxation—it’s just levied in a more hidden fashion—in effect, it’s
just a goods and services tax.”
“Yes, you
could say that, except the decisions on what to tax, and for what reasons, are
now made by the people not the government.”
“No, don’t
go down that path yet. Stick to the economics.” I shook my head. “It sounds
like a big ask. However it’s planned, it must be a huge juggling act.”
“Less huge
than capitalism’s, which you once described in a speech as the most god-awful
juggling act ever attempted.”
“I can see
how all this might work,” I replied,
barely believing myself, “looking at it from the viewpoint of a total economy, but what about at the
individual level? Food for instance. If food is free, how are food producers
paid?”
“In a
cooperative economy, as easily as falling off a journal.”
“Log,” I
corrected.
For several
moments, Wilbur gazed at me quizzically, silently. “That too,” he finally said,
clearly still none the wiser. “Anyway, as I said, it’s quite easy. Every producer
and provider has a financial account, which is credited at the start of each
year by an amount that fully covers their expected expenditures over the year.
Every worker also has an account, but their income is usually credited each
week or fortnight. When a good or service is purchased, the account of the
purchaser is debited by the price,
but the account of whoever produced the good or provided the service is
credited with its cost.”
I had to
ask him to go over it again before it sank in. When I did get it, it seemed a
simple enough approach, yet I retained my scepticism. “And at the end of the
year? Don’t tell me everyone is back where they started again.”
“No, not at
the individual level or even overall. By the end of the year, producers and providers
usually have some unsold goods, meaning they’ll have spent more than they
recouped, and so their accounts will be lower than at the start of the year.
CAPE-planning tends to overestimate needs, just to be on the safe side, so
production usually exceeds consumption. Though sometimes it’s vice versa
because of backlogs. The differences make for improved planning of course—if they’re not trivial enough to ignore.
Accounts that regularly end up lower, for instance, can be a sign that
production targets are too high, or even that the work is no longer needed. In
any case, at the start of the next year, records of the account balances are
made, and producer and provider accounts are all reset to zero—before being
credited with the new year’s expected expenditures.”
“You reset
the accounts to zero!”
“Yes.
Resetting them to anything else would make no sense.”
“But you reset them?! After all that fuss! What
sort of accounts are they?! Surely they’re meant to record what’s happening?
You can’t just wipe out the results year after year!”
“Why not?
The accounts are to facilitate the system, not the system to serve the
accounts. Early on, some people claimed the total economy’s imbalance between
costs and prices of actual sales demanded second-order adjustments the
following year, up or down accordingly. However, a less anal-retentive approach
was taken. Since the entire economy co-operates for the mutual benefit of those
it serves, it’s possible to agree to simply take it year by year, to make the
best educated guess possible about what each year will entail, what it will
require, and to work accordingly. Rather than try to carry over inaccuracies
from one year’s estimate to the next, it’s far easier and more practical to be
aware of the inaccuracies, to learn from them, and to hopefully make a more
accurate estimate for the next year. Of course, this is all true for producers
and providers, but consumers are handled differently.”
“Of
course,” I grated, overwhelmed by the detail. “They’d just have to be, wouldn’t
they? Otherwise it would all be so simple and straightforward, a genius might
be able to understand it!”
“Anyone can
follow this if they put aside their preconceptions. It’s actually much simpler
than the financial maze capitalism generated.”
“Really?!” I
shook my head in frustration, unconvinced. “How exactly then are consumers
handled?”
“Annual
resetting makes sense for producer and provider accounts, but there are
advantages from making individuals’ accounts cumulative—and accessible to all, at all times. That way, it’s obvious who’s a
worko, whether by longer hours or frugality: their accounts are consistently in
the black. Whereas big spenders and lazy burdos stay in the red. Of course, the
majority—‘balos’—keep their accounts in approximate balance from one year to
the next.”
“Is this so
burdos can be identified? So their credit can be cut off?”
“No. No
one’s credit is cut off. Persistent burdos just have consistently negative
account balances.”
“What?
Indefinitely?!”
“As long as
they’re alive.”
“You have
got to be joking! You’re talking about unlimited credit for everyone!”
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Chapter 12![]() |