WMMW

How to create wealth - suggestions for a new economic order

Basis

What points of departure can we choose for devising an new economic order? First we have to put values to goods. In tradtional economies based on money we assign different amounts of currencies to goods, depending om the location where these goods are and depending on the shop where you buy. I once bought a book at Amazon.com in the United States in dollars much cheaper then at bol.com in the Netherlands in euro's. The prices of the goods do fluctuate al the time, which lead to a very unstable situation. In this essay I favour the idea of assigning a value to a good corresponding to the time it took to create it. This stabilises the value of a good, because the time in took to create a good never changes once it is made. This at least works fine for goods that we need daily. Works of art will be evaluated differently, knowing that works of art have a different function in society. Goods that are of nuo use have the value zero. They are waste, and if possible, are not made at all. So the value of a good that has a purpose in daily life and was made in 4 hours has de value of 4 hours. Second We want to create an economic order in which everybody contributes to the wealth of everybody. So there is no unemployment, which means that everyone who is old enough and capable of working, will contribute to what is needed in society. To the work being done we assign two values, the time that ik took and de corresponding reward. I propose to measure the reward in time. So one can work 3 hours (duration) and earn 6 hours (value of the goods he is allowed to buy because of the work done). Third we want an economic order in which work is devided equally with the working people. I propose to strive to a situation in which every working man or woman works the same amount of time. In my view the reward of the work depends on the complexity and responsibilities associated with the work. So when the work requires a certain education and training, it will influence the reward. Fourth the differences in wages should be reasonable. Extreme wealth next to grinding poverty will not be acceptable to the desparately poor, and will lead to social and political unrest. The mechanisms within the new economic order should combat the development of different classes of privileged and underpriviledged. Fifth everybody should enjoy an minimum of wealth. Everybody needs a house for shelter, a place to sleep, enough food, access to education, access to medical assistance when needed etc. Sixth the mechanisms within the new economic order should favour technical progress Seventh the mechanisms within the new economic order should obey certain ethical standards. Caring for the environment is one of them.

Distribution of work

A question every nation tries to solve - or should try to solve - is how to avoid unemployment, i.e. how to reach a situation anyone can find a decent job and can make a decent living.
Astonishingly the question is not hard to answer. You know what products are sold in your country. You know how many items of each product are sold in your country each year. You know how much time it takes to make each of these products. Then you add together all the hours needed to produce all the products. You devide this sum into the number of people who are capable to work and you have the number of hours every body should work each year. Then you divide the work to be done in tasks requiring the same number of hours of working. Then distribute the work to be done assigning to anyone capable to work a such a task.

A mathematical problem

Maybe this idea makes you think of communism. And you might suggest that communism is a bad idea. But the idea is not about communism at all, but is about a calculation. It is an arithmetical problem relevant to all countries, irrespective of the type of government: capitalist, socialist, communist or whatever. Any country can make this calculation. It will reveal at least an estimate of how many hours each healthy citizen could or should contribute to the society.

The value of products

In a shop window the articles are priced in dollars, pounds, euro's or whatever currency. Let's imagine the number of hours it took to make the article is also mentioned. Comparing the prices and the number of hours it took to make the product will immediately lead to questions. For instance: let's assume that the number of hours necessary to make a box with a Monopoly game will be less than the number of hours needed to produce an ounce of French beans, but in local currency a Monopoly game is much more expensive than the ounce of French beans. You will immediately ask why. People get immediately a better feeling of the real value of common goods when the value is expressed in hours needed to make the product. You can differentiate into number of hours to make the parts or ingredients, number of ours needed to transport these to the plant, numner of hours needed to make the product, mumber of hours needed transport the goods to the customer, number of hours needed to clean all pollution due to the production. Mention all these numbers of hours for all products in any shop window. It will trigger a revolution in the consciousness of the public.

Efficiency, quality, environment, innovation

Let's imagine a group of people wanting to work together to produce a number of goods needed for daily use. If you succeed in dividing the work to be done equally and fairly among the participants, it is in everybody's interest to strive for efficiency, while inefficiency has the consequence that all participants will have to work longer. It is also in everybody's interest to minimize repair sessions. So high quality standards are in erverybody's interest. This will reduce waste of raw materials and other resources. And this will reduce pollution. Technological innovation will imply that all participants will work less, so there will be an unceasing want for technological innovation among the public. Deviding the work fairly to be done among everybody capable of doing work seems promising.

Freedom and justice

Too often in history forced distribution of labour led to inhuman circumstances, inefficiency, lack of initiative and curtailment of freedom. How to avoid old and modern forms of slavery will an important issue. Unfortunately there is no guarantee that the theory I try to develop will lead to a better world. In fact, I am afraid that the theory I try to develop will be abused some day. If you want to restructure the economy I hope the theory will be helpful, but all depends on the good will of the people applying the theory.

The model

An imaginary island

So let's imagine a group of people living on an island. All the inhabitants agreed that all healthy adult inhabitants, not the elderly, all do the same amount of work. The same amount of work means that everybody works the same number of hours each year. What data must be available and what kind of calculations must be carried out to make the possible?

The inhabitants of the island realize that they need a system. What will this system look like?

The system

Functional requirements

Let's assume alle the inhabitants do have a cell phone and/or a computer. On their cell phone and computer the inhabitants receive the requests for the work they are asked to do. They can accept the work, but they also can reject it, for instance saying "I am ill today". They can also request an activity, for instance "my daughter is ill, is there a doctor available who can examine her?". Maybe one of the inhabitants passed an exam today. He is now entitled to do a certain job. Let's say he is a denstist from now on. Someone has to enter this new data into the system, and the exam committee has to confirm this fact. Maybe someone left the island, and is not participating in the economic activities of the islanders anymore. There are people that check that no resources have been damaged, have disapperared, and if so, this must be recorded in the system. There must be a verification program that the system is in accordance with reality.

Requirements to any system

The system must satisfy the requirements that go for any system. To minimize the costs of building this system the islanders choose to use free software as much as possible. Let's assume that, after a long debate, they opt for a Linux operating system, the programming languages Python and C, and the choice of the database system is postponed as the islanders cannot see what developments there will be in the near future.

Aspects

It's normally wise to cut a complex problem in subproblems. In the same way a complex system can be organized as a mix of components that work together to reach a certain functionality. Now follows a first estimate of what subsystems might be distinguished.

A closer look at the scheduling

Let's have a closer look at the scheduling subsystem. Starting point is the list of goods to be delivered in a future period. The list specifies what goods should be where and when. Taking into account the production processes and the available resources the schuling subsystem calculates when the production processes should start. The scheduling process calculates the activities to be done guaranteeing that sufficent goods are produced, and not too much is produced. Production of goods nobody needs is a waste and inefficient. But starvation due to a failed harvest should be avoided, and one way or another it might be better to produce more food than neessary, in order to be able to cope with misfortunes or disasters. Many wishes are not specific. You want to be able to eat enough food to stay healthy, but what you exactly will eat in the comning weeks or coming months, you don't care. You do not plan the ingredients of each dinner many weeks in advance. So part of the ordering subsystem will be an estimate of what will be needed. A lot of statistical estimates will be input for the scheduling subsystem.

Value

What time took it Van Gogh to create a painting? A few hours. What time took it to make the canvas and the paint for this work of art? Probably some hours. What time took it to cut the tree and make the picture frame? What portion of cutting the tree can be attrubted to the making of the painting? Let's guess in total it took a few days to make the painting. Compare this to what a Van Gogh painting will cost at an auction today. A work of art is priceless. A work of art is not the type of products the inhabitants of the island agree to make collectively. What they agree to produce are the commodities you need to have a decent living: shelter, cloth, food, health care, education, protection. These are all products and services that can well be measured in terms of hours needed to make the product and to tidy up afterwards. I propose to make a distinction between creative work and routine work. The products of routine work can be measured in hours. For creative work that is not the case. No one knows in advance of creative work what the result will be. And there does not have to be a lasting success. I imagine that - beside sharing the activities necessary to stay alive and to reach a reasonable wealth - the islanders agree that all of them spend a few hours a day doing something they love, just for fun, which could be anything, from singing in a choir to practicing the violin, from playing a game of basketball to organizing a barbecue, from sewing clothes for a theatre group to doing scientific research. But that type of work is not in the scope of the system I have in mind. Nonetheless instruments needed for this creative work could be made as part of the joint work. The making of musical instruments or the making of scientific instruments can be tasks that are assigned by the system.

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