Chapter 11

A Free Lunch

“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. “Finish checking your order, then perhaps I should fill you in on what you absolutely need to know.”

I did as he suggested, finding the order 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 ok 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 the product of 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 the key to why you can have a free quota of food, but also why economic growth is not necessary. It is the basis of economic rules which ensure no-one is penalised whenever less work is needed, so that abundance and the work that creates it is shared.”

“Sounds like you’re getting back to the seven-hour working week stuff you already talked about. But how is it actually arranged? How can it be arranged?”

“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 appalling 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. No, the first year, wages stayed the same but with ten percent less work and income, prices were reduced across-the-board 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, people make work, naturally enough they 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 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. Education. 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 cost 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. Even if it’s de-centrally 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? And if free food requires the raising of prices of other goods above their costs, then producers of those goods will make a profit, while food producers make a loss. You said it was a profit-free system.”

“It is. A cooperative economy can simply redistribute ‘profits’ to cover ‘losses’, so all producers break even.”

“How?! I can’t imagine how the logistics could be tackled in even a small economy.”

“Quite easily actually. 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 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 the provider that produced the good or service is credited with the cost of producing what was bought.”

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 in balance again.”

“No, not at the individual level or even overall. By the end of the year, providers are in balance only if all the goods they’ve produced that year are sold; the more common result is they’ll have some unsold goods and so their account will be negative. 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. Persistent negative balances prompt more work, or more efficient production, or reduced targets, or sometimes they’re a sign the work is no longer needed. Whereas positive balances usually lead to shorter hours. ”

“Yes, yes,” I grated, “but if nearly everyone’s out of balance at the end of a year, wouldn’t it lead to confusion?”

“Undoubtedly. So, at the start of each year, records of the account balances are made, 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 its players, 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 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.”

I shook my head in frustration, unconvinced. “Whatever you say. Just how exactly are consumers handled?”

“Their accounts are not reset to zero each year, rather each person’s account is cumulative.”

“You don’t try to balance them?”

“No need. Production and consumption are never identical, however thorough the planning. While annual resetting of provider accounts makes sense, cumulative consumption records reflect each individual’s contribution to their community. And they’re accessible to all, at all times. So 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.”

“But what’s the point? Is it to identify burdos, so their credit can be cut off?”

“No. No one’s credit is cut off. Persistent burdos just stay in debt.”

“What? Indefinitely?!”

“As long as they’re alive.”

“You have got to be joking! You’re talking about unlimited credit for everyone!”