Monday, April 30, 2012

The Economy Reinvented

I believe that capitalism, socialism, and even a hybrid--what I call cushioned capitalism-- are inadequate economic systems:

Capitalism has winners and many losers, too many of whom end up destitute. And because it takes ever more brainpower, drive, and often technical expertise to be one of capitalism's winners, merely urging low achievers to "buck up and work harder" is likely to work ever less well.

Socialism is flawed because, as Margaret Thatcher said, "Eventually you run out of other people's money." Also, socialism rewards low achievers and punishes, through "progressive" taxation, the segment of the population that contributes most to society. Already, the top 5% of earners pay 59% of the income taxes.

Even cushioned capitalism---capitalism with a generous safety net, is problematic. It's merely a compromise between two deeply flawed economic systems.

A fatal flaw shared by both capitalism and socialism is that their unit of currency is money.

As a thought experiment on which I'd like your opinion, I am proposing the following economic system: one in which everyone was paid the same: enough to live in a modest apartment, drive a modest car, have modest health care, etc. And to increase people's motivation to work hard in school, pursue a challenging career, work hard on the job etc, I propose rewarding people, not with extra cash, but with Contribution Points.

Already, many if not most people do lots of work for no money because they feel they're making a contribution: They volunteer for a favorite cause, they write reviews on Amazon, they contribute their time to improving crowd-created products such as Wikipedia or Firefox. Part of many people's motivation is to get points: for example, toward being a high-ranked Amazon reviewer, even though those points aren't redeemable for anything.

In a Contribution-Points-based economy, anyone who wanted to participate would add their name to a new website; let's call it Then, anyone else could award Contribution Points to anyone else, just as we all can review a book on Amazon and "Recommend" someone or something on Facebook. People would award points on a scale such as -100 (selling crack to children) to +100 (inventing something that helps many people.) For example, a child doing his homework one night might earn 1 or 2 points.

Thus instead of competing for dollars, people would be competing for how much societal contribution they've made. I believe that would immeasurably improve our world.

Of course, the system as I propose it needs a lot of work. For example, the system would need to address such problems as, "How often should someone award a person who's working 60 hours a week for decades trying to cure cancer?" and "Should public figures be excluded?": After all, their fans would bestow many points each time a rock star merely opens her mouth on the radio or on an mp3 player? But if we exclude famous people, we exclude some of society's greatest contributors. And of course, the system would be subject to abuse just as, for example, a hotel owner might write a false bad review of a competing hotel. And would average folks be demotivated by seeing, in a number, that despite their best efforts, their contribution to society were deemed much smaller than that of others?

Clearly, the model needs work. But I predict that when day is done, some version of a contribution point system, plus the self-regulating power of crowd-sourcing would, net, result in people's Contribution Point total being a worthy measure of how well they're living their life, I believe a better measure than the number of dollars in their bank account.

And importantly, I believe that a person's point total being public would be a strong motivator to him or her. Nearly all of us care how we are perceived by others. Our Contribution Points score would be a measure of that. I hypothesize that a person's score would be a greater source of pride than what many people do in a money-based economy to feel proud and impress: buy designer-label clothes, drive fancy cars, buy big houses, etc.

Of course, getting the public to embrace a Contribution-Points-based economy would require a massive education effort, but education has made remarkable changes, for example dramatically increasing the literacy rate. So is it absurd to think we might get sufficient embracing of a Contribution-Point-based society if our major mind molders--the schools, colleges, media, government, and religious institutions--undertook a major effort to help children and adults realize that the value of one's life lies in how contributory it is?

I am well aware that this is a pie-and-the-sky idea and that this germinal proposal needs to be much improved. That's why I'm asking for your reactions. But I believe that radical, big new nascent ideas are a worthy ingredient in our recipe for building a better world.

I welcome your thoughts.


Anonymous said...

Marty i have a big respect and interest in your ideas. This is something that i was thinking in a little different way and now i m so happy to read along your article and finally see what i was missing in my thoughts. I always thought money should be replaced with something much more valuable and i m so suprised for myself that i couldnt find with what! That is an awsome system you r offering and ot just makes sense. Yes it needs some work as you say but just think about it! What would we loose just by trying? Please write more anout it and get people together to believe in it! Twitter is a very right point to start i think;) congradulations

Maria Lopez said...

What about the use of stored capital? While many big projects were taxpayer funded, others such as the transcontinental railroad, the internet and Southern California Edison's hydroelectric power system were created using a large amount of privately held capital as well as (sometimes unfair) government help.

How do you get the funds needed for boring large scale projects that take multiple years?

Anonymous said...

One thing it would need is a limit per day of contribution points any individual could donate, and probably also a limit on those which could be received per day.

If there were no limit on points given per day the points wouldn't involve making choices from a finite resource.

A limit on receipt per day would help prevent many of the problems with coalitions favoring one another - as in rock stars and fans, or as in internet cliques.

Points not given on any one day probably should be "banked," though? Perhaps someone with some training in economics might have an informed opinion on that?

I'll bet there are examples of similar models in history, and of how those models have been exploited - worth reading around on to understand more about the implications of the idea.

Marty Nemko said...

Thank you, most recent Anonymous, for the excellent suggestion.

More needed!

Marty Nemko said...


Major infrastructure projects do require some amalgamation of public and private dollars. Nothing in my proposal mitigates against corporations existing, raising money through profits and stock offering. Nothing in my proposal mitigates against government taxing people to pay for infrastructure projects.

Chuck said...

I don't read your column often, but when I do, I often agree with your ideas. Sometimes I feel you are really off base. This is one of those times.

Everyone paid the same kills incentive. The "contribution points" may be an incentive for many either for self satisfaction or "bragging rights," but I suspect many will just think them silly and they will provide no incentive.

If indeed, the points prove to be valuable, then there is the problem of awarding the points. There will never be a consensus on what a particular action is worth in relation to another. I visualize the awarding of points will be bogged down in unhealthy competition, controversy, and special favors from those who control the points.

Bad idea.


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