Some Notes Toward a Federation Currency

[alexxkay]

Some friends and I have been recently discussing some of the apparent paradoxes in the alleged utopia of The Federation, as presented on various Star Treks. One particular issue stuck in my head, and I would like to propose a potential solution.

(I haven't seen remotely all of ST, and remember even less. I'm interested in hearing data points that either support or contradict what I lay out below. But remember, this is about The Federation, NOT about what happens out on the edge of their control, interfacing with non-Federation cultures.)

The claim is often made that the Federation "doesn't have money". This is, on some level, obvious nonsense. It is not possible to entirely eliminate scarcity, so there needs to be some mechanism(s) to allocate contested resources. However, this may be to some extent a translation issue. If your currency differs radically from traditional/"primitive" currencies in enough fundamental properties, perhaps you can honestly say that it isn't "money".

Here's a sketch of a system of "Social Utility Credits" (SUC, or "Credits") that seems to fit the observed data (as much as I recall):

• All essential goods and services are provided by the government.
  • These include replicator access (food, drink, clothing), power, basic housing, net access.
  • Legal framework exists to add new things to this list (maybe "Public Transport(ers)", for example), or remove things (though this is very hard, by design).
  • It is expressly forbidden to use SUC to buy or sell anything on the "essential services" list.
• SUC is administered by a Federation "bank" (necessarily decentralized across the quadrant). But it's a lot different than what we call a bank today...
  • Everyone's SUC balance in the bank has a NEGATIVE interest rate. No hoarding!
  • SUCs cannot be borrowed, loaned, inherited, or gifted (except as detailed below). SUCs cannot be the subject of binding contracts. (Let's try and avoid having a parasitic Financial Sector.)
    • Physical goods and services CAN be gifted, of course, but that's outside of the money economy we're discussing here.
• Any Federation citizen can offer a (non-essential) thing that they own or service they can do for "sale", by attaching a price in SUC to it, and posting the offer with the Bank.
  • Any Federation citizen can "purchase" a posted item from the Bank, if they have sufficient SUC. (And meet whatever other reasonable restrictions the seller has placed on the offer. E.g. "I live on Earth, so this performance offer is not valid for other planets.")
  • At the time of purchase, the "price" is deducted from the buyer's account -- and destroyed! The "seller" does NOT get those SUCs. They just know that someone "worthwhile" received what they sold.
• So, we've now listed lots of ways in which SUCs get destroyed (interest, death, purchase). How do they get created?
  • The primary mechanism is via the equivalent of salaries. The government defines how "valuable" various jobs are, and those workers get paid directly by the Bank on a periodic basis.
    • How those numbers get defined and tweaked is a perennial political topic for debate.
  • Secondarily, all citizens get a Basic Universal Income from the Bank. After all, in a utopia, having at least a small amount of "mad money" could be considered an essential service in itself.
  • Worried about this system being too centralized? Want to introduce a bit more of a market-like phenomenon to the SUCs? I have a potential answer for that: Gift Credit allowances. In addition to getting a small stipend of SUCs for themselves, each citizen also gets a periodic allowance of Gift Credits. Gift Credits are like SUCS in several ways, but with some key differences.
    • GCs also have negative interest, to prevent hoarding.
    • GCs also cannot be borrowed, loaned, inherited, or subject to contracts.
    • The ONLY use for GCs is that you can give them to another citizen, at which point they turn into SUCs.
    • In this way, similar to our own economy, someone who is popular or clever can become rich, without depending upon the government directly recognizing their contribution to society.

I have noted a couple obvious points of friction in this outline, and no doubt missed others. But I think it's a fun exercise, and I'm happy to continue the fanwonkery in comments.

Comments

[rickgilbert]

Hm. I like the thing you invented here, though there is no evidence for it really that I could see in TNG.
I also like this article, and the much longer article it references.

https://slate.com/business/2013/11/star-trek-economy-federation-is-only-mostly-post-scarcity.html

[jducoeur]

(Sorry to be a downer, but I do think about this sort of thing a lot.)

So while this isn't *precisely* classic communism, it does seem to have some of the same problems. In particular, you're brushing aside *the* central question of economics:

How those numbers get defined and tweaked is a perennial political topic for debate.

Seriously, this is what economics *is*. I have a rather fun audio course on the subject, that starts out by making the point that economics is, at its heart, the science of making choices. How you value jobs is a choice, and it's a *hard* choice, with a lot of system-dynamical challenges of aligning incentives with needs.

Basically, by putting this question into the hands of the government, you enormously enhance the *power* of the government officials who make this decision. In a utopian environment where everyone is working solely for the greater good, sure -- that's fine. In the real world, that's a recipe for corruption, bribery, collusion and strong-arm politics on an epic scale.

Redefining money like this seems likely to de-monetize the economy: you're making money fairly close to useless. It gives folks a lot of incentive to switch to barter instead, and almost guarantees that a black-market physical-gift economy arises.

I honestly think you're going against the grain of human nature here, especially with constraints like the fact that SUCs can't be inherited: that powerfully incentivizes people to gather and hoard *stuff* instead of money -- which makes it even less controllable than current economies. It also means that, for those who are of an alpha frame of mind, amassing power via money is off the table, so more directly controlling *people* is the way to go. Think of all of the monsters who currently are attracted to business being attracted to government instead. (Which is, broadly, what tends to happen in communist systems.)

Basically, I think this works if everyone is nice, good and honest. I'm not aware of a human society where that's ever been true, so I'm kind of skeptical. Systems that work in reality usually have to be built around assumptions that humans are often lazy, often greedy, often power-hungry, and many will be trying to game the system on a constant basis. Many people -- not just the outliers, I mean *many* people -- find it fun to get one-up on The Man, and break the rules. That means a lot of checks and balances are necessary at all levels. And *well-regulated* market economies are themselves checks and balances.

(As I've mentioned before, the key problem we currently have isn't the existence of a market economy, it's the degree to which right-wing regulatory capture has largely destroyed regulations that used to at least largely work. You often refer to "late-stage capitalism". Far as I can tell, it's more the case that we've reverted to *early*-stage robber baron capitalism, and forgotten that a modicum of socialism is necessary in order for things to work properly.)

Mind, I do think you have some interesting ideas here, not least the notion of mandatory negative interest. The problem is that the way you've structured the system essentially forbids large-scale private enterprise (since you don't allow for contracts, which means you have basically forbidden monetary property), which means that *investment* in is largely impossible. (Because without contracts, fraud becomes trivial, so people can't really trust each other to do what they promise.) That's a pity, because the negative interest rate would strongly drive people towards mutualized investment, and investment can be a powerful social good if well-regulated...