The following is a rough transcript which has not been revised by The Jim Rutt Show or Remzi Bajrami. Please check with us before using any quotations from this transcript. Thank you.
Jim: Today’s guest is Remzi Bajrami, a self-described anarchist Albanian born in 1973 in Yugoslavia, in what is now North Macedonia in a Muslim village, near the border of Albania. He moved to Connecticut in good old USA in 1979 after working in marketing software, real estate development, finance, and specifically in the financial markets trading and such. These days he’s the co-founder of Common Planet: A New Game of Life, and you can learn more about Common Planet @common-planet.O R G. Welcome, Remzi.
Remzi: Thanks for having me, Jim. Glad to be here.
Jim: Yeah, it’s great to be here. I always love talking about people thinking about these things. Today we’re going to talk about Remzi’s book, also called Common Planet. And this is interesting. This is the first book that I’ve read, and maybe the first book that’s hit print that talks quite specifically about Game A and Game B. So maybe we’ll start off by, I’m kind of a little curious, how did you find the game B community and then perhaps give our audience not all of whom are up on game B lore, what those terms mean to you?
Remzi: Sure. It’s a good place to start. The, I think the first time I heard the game B terminology was probably on YouTube with one of the Weinstein brothers talking with some other members. So I think I’d learned about the Game B Facebook community through Twitter actually. Somebody made a Twitter, Gwendolyn Holt I think it was who made some kind of a tweet saying, “Hey, it’s time, we get some action and get everyone together,” or something along those lines. And she created this coffee channel and those conversations ended up leading to somebody forming Game B. I think, I feel like kind of helped to promote a lot of people over to the channel early on.
Remzi: But essentially Game B, as you know, is the terminology that we’re using to describe in alternative to the existing economic game, which we’re now realizing is the same as what we’ve had forever, which was what we call Game A.
Jim: Yeah, that’s a good place to start, and as the time goes on it’ll probably come a little bit more clear to people. By the way, if people want to learn more about Game B probably the best way to do it is look at the short film that we recently put out called GameBfilm.org. And then if you’re also interested in finding other people interested in the Game B movement, game-b.org. Better put a www in front of that, or it might not work. So if you like what you hear here, come check it out.
Jim: So early in the book, it might have been the first page, there’s a quote from one of my heroes, Hunter Thompson. Right? And my sense is this is what you’re pointing at, “Creating a place for people to live like human beings instead of slaves to some bullshit concept of progress that is driving us all mad.”
Remzi: Yeah. He’s in basically referring to Game A, this equation of economics that has captured all of us. And we’re trying to escape that. We’re trying to escape obviously to a new system.
Jim: Yeah. Now as you start to set out your model and I like this book, by the way. I tell people that as I was telling Remzi in the pregame, when you read self-published books unfortunately about 90% of them kind of suck. But this one is actually good. It’s well-researched, well-written actually. And there’s some things about it I’ll complain about, but of course as regular listeners know, I complain about everything. But overall I would say it was a book that was enjoyable to read. It was clearly written and it talks about some real important ideas. So I would certainly encourage those who find this conversation at all stimulating to either buy it on Amazon, or you can download it for free in PDF format over at common-planet.org.
Jim: So anyway, let’s get into the structure of your argument. You start off by early on. I don’t necessarily follow books chronologically. I took 306 notes, I discovered when I was processing my notes this morning turning them into my topic sheet. So I took a lot of notes and I don’t necessarily pull them all in order. But anyway, one of the important distinctions you make is that in Game A, there are essentially three class of players. We’re talking about games, we might as well have players. You have people, corporations, and nations. Why don’t you talk just a little bit about what you mean by those three things. It’s sort of obvious, but put your gloss on it.
Remzi: Oh, sure. Well obviously people are the primary and only real players. But the game itself, Game A as I describe it, is to own property for its value. And so who can own property? All people, corporations and nations. Those other two entities are clearly fictional, but the game being to own things. Somebody has to own things. And so people found that it’s more advantageous to own things in larger groups than as an individual for multiple reasons. And so that’s why I broke it down into those three categories. I mean, that’s really what I see.
Jim: Yeah. Those are my first point of pushback is that you strongly emphasize property and you quote Adam Smith, “The division and safeguarding of property occupies the whole world.” And I would say that was sort of true back in the mercantilist period, say before 1700, and in the early capitalist days before the industrial revolution really got rolling. But I’m going to suggest that while property at some level is important, the real engine of Game A today is profit, which is different, right?
Jim: For instance, a company like WhatsApp had 19 employees and a few laptops and all this, all that, not much. Sold the damn thing for $19 billion, right, when it got acquired by Facebook and it was considered a grand success, despite the fact they didn’t really accumulate any property. Rather they created an engine that people at least thought would be profitable someday, or otherwise fit into the Zuckerbergian master plan to take over the universe. And they got bought off.
Jim: And I would also say, having worked in major corporations, we actually try hard not to accumulate too much property because one of the financial metrics at Wall Street looks at something called ROMA, return on managed assets. And so to the degree you can get your assets down and keep your profit up on a ROMA basis, which are very important metric to support your stock price, things look good. So I’m going to suggest that overfixation on property may not quite be right.
Remzi: Perhaps, but you have to understand the way I defined it in the book is that it isn’t just a physical thing. It’s also something metaphysical, something that we can believe in it. It doesn’t have to be real. And so that quote, by the way, I think it was from Tolstoy, not Smith. Nevertheless. So from my view though, remember my definition of Game A is to own property for its value. And so when you mention asset, an asset as far as I’m concerned, regardless if it’s fictional. It’s a fictional piece, it’s a fictional property. So it is property in that form, in that definition. So that’s what I mean. So yeah, I can understand the pushback because that word, obviously many people may be thinking of physical property, or real estate.
Jim: It feels more static than it does dynamic. When you’re building company, you’re trying to build an engine to create profit, right? And it’s the output of the engine, not the engine itself, that actually turns out to matter in business. But let’s move on. That was just an interesting little point.
Jim: I’d also say that obviously you and I and our compatriots, aren’t the first people to think about this by any means. And one I think is quite interesting is the Declaration of Independence, Thomas Jefferson. A lot of the declaration, a lot of the work of the founders was based on the work of John Locke. And Locke said that the purpose of political life is life, liberty, and property. Jefferson rejected that, actually. And wrote life, liberty and the pursuit of happiness, which well, of course they actually built commercial early capitalist operating system for America. They were at least realizing that there’s more to life than just property.
Remzi: There is, but there is no life without property.
Jim: That’s true too. That’s true too. And so in a box, you call out that in Game A all value comes from trading, to extract value by trading property. And this one I’d like to get into a little bit because I would say another area that I wouldn’t say we disagree, but my perspective under emphasis, we’ll get more into it more later, is again, when people actually build a business, even if it’s the one person business they’re focused on value added and transformation, unless they’re a complete parasite middle man, which sometimes they are, more so than just trading.
Remzi: Well from the market’s perspective, the entrepreneur, what they’re doing is they’re purchasing. They’re using capital that they got, which is property, and they’re exchanging their property through trade to buy other property. And they’re buying resources, whatever they may need. They may be renting a building. They may be buying supplies, computers, et cetera. All these things are property. They’re using their property to exchange. That’s a trade.
Remzi: So there’s trading involved there. And then they’re trading their money for these things. They’re also trading their money for other labor if they have employees, and combining those together and they produce some service or commodity and they’re selling the resulting service or commodity for what you are referring to as profit. That’s Game A in a nutshell right there, bang.
Remzi: And so all it is is trade. Every single transaction between the individuals is some form of property, whether physical or virtual.
Jim: I would buy that. But let me give you the simple example that I used when I was thinking about this. A guy who builds houses for resale. As you say, he uses creditors’ cash, often credit if he’s done this before. Buys a pile of lumber, buys some pipes, buys some wire, hires some people. Does some of the work himself, usually small home builders do 25% of the work themselves, something like that. Now here’s the interesting part. And this is the part that I think is sort of missing is that this pile of lumber, pipes, wire nails, et cetera, is only worth a bit as raw material.
Jim: But if someone knows what they’re doing, they can convert this into a house, right? They can add value, essentially double the value, or more than double the value from the spare parts by adding labor intelligently. And that knowhow, the care that goes into it. A person can build a house in a shitty fashion, or they can build a house in a great fashion using exactly the same materials. And I think that’s really an important aspect of creation in our world: care, skill, expertise, and those kind of things. And I’m always looking at proposed new systems to make sure they haven’t forgotten about that part.
Remzi: Yep. Well, I come from that world, so there’s no doubt that I understand what it takes, I know what real labor is. Yes, I’ve worked obviously with capital and finance as well, which has nothing to do with physical labor too. So I know both worlds. I understand that very well.
Remzi: But the truth is though, Jim, when we were building these homes, we didn’t build them to build homes. I wasn’t doing any of this besides the purpose of profit, period. We had capital. We had the ability to buy land. We had the ability to get credit to build a house. We knew all the people in construction. We did some of the construction ourselves, as you mentioned. But all of it was for the purposes of property. So we’re chasing the value through these exchanges, through trade.
Remzi: So we’re trading all of these various properties that we own to capture more value for ourselves. And the value form itself in this particular game is interesting too, the money, the currency system that we use. The way I see it is also property because what we’re doing here is we’re trading, right? And so it’s barter. You’re exchanging one property for another property, but instead of the problems of barter, of having to exchange something that the other person may not want, the double coincidence of wants, what have you, the money in that value form of money, that kind of property solves that problem. Everybody will be willing to trade whatever property they may have for your property, which represents all other value and property. And so.
Jim: Yeah. That’s a very important point. In fact, we talked in the Game B world about generator functions. What are some of the deep underlying causes of Game A and one of the ones I personally call out a lot is what I call the utter dominance of everything by short term money-on-money return. By short term, I mean about three years, something like that. And people claim they’re operating the long term. Bullshit, right? If they can’t see it in three years, they’re not doing it. That’s not quite true in every case, but the example is certainly true for home builders, right?
Remzi: Oh, no doubt.
Jim: You know, one of the generator functions that I see is the inner loop of money-on-money return, particularly in essentially short term, up to three years kind of basis as a force field that pervasively molds Game A. And I was very happy to see that you realize that.
Jim: Now, of course, I think I’m a fellow monetary nerd. As it turned out my road into Game B was four years of research on money and monetary systems and alternative monetary systems. And we’d read many of the same books, though I was doing this work 2008 to 2012. So you surfaced a bunch of books I hadn’t read, so I’m now going to go back and read. As you know, it’s a seductive topic and it’s a very important one. And we’ll talk about that more as we move along.
Jim: So we have Game A, it has various attributes. The fact that money-on-money return is the most powerful, single force field results in some things which aren’t so good. Now Game A, at least in my formulation got underway in its modern form somewhere around 1700 with the invention of fractional reserve banking in the Bank of England, the invention of modern science, self-governance with the Glorious Revolution in England, 1688, the beginnings of the Industrial Revolution in the early 1700s, et cetera, and picked up steam. And actually it was a good thing for humanity, certainly compared to feudalism and the divine right of kings, which came before.
Jim: And it spun up remarkably quickly. This combination of capacities caused an unprecedented explosion in population, capacity to build things, et cetera. People don’t realize how small humanity was in 1700. The population of the world was about 650 million people, less than a 10th of what it is today. The average human used less than a 10th as much energy per capita as we do. And most of that was in the form of animals, draft animals. Some bit was human power, some bit was wind power, but most of it was animals, right? And we had not yet really tamed coal in any major way at 1700.
Jim: Now we’re consuming at least 10 times as much power per capita, and there’s 10 times as many of us. We’re basically consuming a hundred times as much energy as humanity did in 1700. And the vast, vast, vast preponderance of that comes from fossil fuels. And so this way of bootstrapping from dire poverty in 1700 seemed like a great idea at the time, right? But as we spun up, it had many unforeseen consequences.
Jim: And then perhaps most importantly, at least from my perspective, is starting around 1945, the technologies that built one upon the other started reaching the scale where we could destroy ourselves. Famously, nuclear weapons. Well, yeah, we could fuck up shit before that, but we couldn’t actually destroy whole civilizations in an afternoon, as you could in 1945. And probably about 1975, our population had reached beyond the carrying capacity of the earth without major injections of factory-made artificial fertilizers and things of that sort. And population has continued to skyrocket since. It’s almost tripled since 1975.
Jim: And so we’re very deep into the regime where we are way overusing the ecological services that are provided to us by Mother Earth. Then if we fuck that up, we’re really screwed. And there’s, of course, we both know various other things that late stage Game A has brought us to. What many folks in the Game B world refer to as the metacrisis.
Remzi: Yeah.
Jim: What do you think about that idea, the metacrisis? And in your mind, what are some of the aspects of things that are the negative outcomes from running Game A without any modulation for the last 320 years?
Remzi: Wow. Not prepared for that question. I don’t think too much about that actually, and I would prefer not to focus too much on the problems that Game A is causing, because I think those are kind of what everyone else is focusing on. And so, like I mentioned, in my book I chose to focus on solutions. And so I found that the main problem, of course, was this value game.
Remzi: So essentially what the game is, by the way, what we’re playing is a game of value. And the thing that is valuable in the world is property. And so the way in which that people get the value points, the money, is through their relationship through the property. And as you mentioned, in the 1700s, once they began the fractional reserve banking and that system, what that was, was the ability to extract more resources from the world for trade. And that’s all it is. And all we’ve done is we’ve taken that game and maximized it and just grown it and keep continuing to grow it as fast as we can. And we see all the problems.
Remzi: So to talk about what it’s doing is not as interesting for me as to talk about what we can do differently so that it doesn’t do those things.
Jim: That’s good. We’ll just take it as a given. The world’s fucked up and everybody knows it, goddammit, and we’ll move on from there. Though I will suggest two things.
Jim: One Game A did a tremendous amount of good along the way. 16-1700, most people were living in houses with dirt floors. Were heating their houses, if they lived in temperate zones, with dirty fires. They didn’t have any glass in their windows. They had respiratory diseases. Half the children died before there were five. Widespread famines where hundreds of thousands of people, sometimes millions of people died, were still happening. Even in Europe, right? Famously the potato family in Ireland, 1844, killed at least a million people, drove another couple of million into exile.
Jim: So Game A solved a lot of problems. There was a reason that Game A was essentially celebrated for quite a long while. Of course, there were some negatives along the way, particularly the horrors of imperialism and colonialism. But overall it has taken humanity a very long way. And it’s always good to remember that.
Remzi: For sure.
Jim: That Game A is not by any means unilateral bad.
Remzi: No.
Jim: I’d argue that it was powerful, the most powerful system ever created by far by humanity. But it has no brakes. It has no ability to say enough.
Remzi: Exactly.
Jim: And we have rushed past the limits in so many ways.
Remzi: It’s a necessary evolutional progression that we went through. However, I think we stayed in it for way too long unnecessarily. We could have changed probably a hundred years ago with some more focus. If there wasn’t sabotage, if there wasn’t already winners who were manipulating the game and preventing us from evolving, like I call in my book an evolution of economics, we could have, we should have evolved a hundred years ago.
Remzi: But I agree with you 100%. Game A was wonderful. And it is responsible for the majority of the innovation, material possessions, and the goods and production. All the stuff that we have in the world obviously came from that. And that’s good. But as you know, too much of something good will also kill you.
Jim: Yeah, indeed. And to your point, this is to my mind the gateway to thinking in a Game B way, is there were pathways to have gotten off Game A at various times. Or another way to say that is the Game A that we have is the result of a series of frozen accidents, right? That things that happened sometimes for very self-serving reasons, sometimes a small group of people made them happen. Very famously. the Federal Reserve was a small group of people, maybe a hundred who some of them were self-serving and some of them thought it was for the good of the world. They got together on Jekyll Island, famously, and crafted the Federal Reserve.
Jim: That got pushed through by Woodrow Wilson, and that switch changed things in a very powerful way and led to the mass industrialization of the US. The US was the industrial power of the world by 1913, when the Federal Reserve came into being, but nothing like it was by 1950. So the period between, actually 1913 and 1975 was powered by, first the Federal Reserve and then the Bretton Woods institutions, the monetary institutions like the World Bank, the monetary fund, what the fuck’s the name of that. Anyway. All the stuff that came in after World War II.
Jim: And then another one, which is what really let Game A off the leash and led to what I’d call late stage Game A was Nixon taking the US off the gold standard in 1971. At that point, finance had no restraint at all, right. It was just Katie Bar the Door or off to the races. And it was since that point that finance became dominant in our society. It always had more power than it should have, but since 1971 it’s accelerated, until 2006 40% of all corporate profits in America were from the finance, insurance, and real estate sectors.
Jim: I mean, what the fuck? Right? So here’s the good news. Now we’ll get back to this Game B gateway. I think you’re someone who’s trying to open the door, which is all these things were human creations. None of this stuff came down from Mount Sinai with Moses, right? There isn’t a tablet that says central banker managed fractional reserve banking shall be the way we organize our economies. Every one of these was either a frozen accident or a conscious design. And we, the citizens, have the power to change that. We can create new institutions. And we should.
Remzi: Yeah.
Jim: Okay. Before we go on, this is interesting. You have actually quite a long section and we’re not going to do justice to the whole section. So I read in the intro you consider yourself an anarchist. Now of course, a lot of people say anarchist, disorder and chaos. And those of us have read in the literature know that, yes, there could be that kind of anarchy. But there’s also a formal political theory of anarchy, which is how do you organize living without a state? Maybe you could say a bit more about what anarchy is to your mind.
Remzi: Sure. I talk a lot about it in the book.
Jim: Yeah, a whole bunch.
Remzi: I didn’t want to, but as I went through it, I realized that maybe-
Remzi: As I went through it, I realized that maybe I have to, because a lot of people don’t seem to know it, but essentially anarchy means without rulers. And like I mentioned in my book. If there are no rulers and what do rulers do? They make rules, right? And what rules do, they help to organize us so that we don’t kill each other. So we know what the game is. If you remove rulers, then the rules come into question. And if people don’t have faith and the rules are no longer there to organize things, then there’s going to be chaos. And so, eventually, of course, Anarchy came to also be synonymous with chaos, but that’s not true. You don’t necessarily have to have rulers. You can still have rules and have anarchism. And that would be a stateless because the state is today, our ruler.
Jim: And David Graeber, you quote a few times.
Remzi: One of my favorites.
Jim: Has a lot of good material on how one could imagine living without a state. I really love his book, The Utopia of Rules for instance, which is a brilliant book. And of course, one of the foundations, and if you haven’t read this. I will give you $100 which is Debt: The First 5,000 Years, right? That’s a must-read for anybody that’s interested in these questions.
Remzi: Absolutely.
Jim: But I will also say, and this is a Jim Rutt ism probably more than it is even a game B ism. I frankly don’t think that the way forward is going to be compounded by the 18th, 19th, or 20th-century isms. We can borrow from them, but the problems they confronted were very different than the problems we confront. And I think of the challenge of the way forward is to craft a new way, a new social operating system that borrows where appropriate from these previous thinkers, but really starts with a pretty blank sheet of paper. And that again, in game B land sometimes get into these ugly arguments between the capitalists and the socialists. Just shut the fuck up dudes. I’m not really interested in either. I’m interested in the ideas, and I can quote them endlessly of Adam Smith and Karl Marx, but neither of their systems are appropriate for the next 100 years. God damn it. So, stop arguing about the isms.
Remzi: It was a function of their time though. What the isms had limitations of the solutions, the game B as it is, wasn’t possible really, at least, certainly not during Marx [crosstalk 00:25:27]
Jim: Not to say that the isms weren’t appropriate for their era, but the isms were built for… I mean, without computer networks, without blockchain, without lots of stuff. You can’t do game B things probably.
Remzi: No doubt. From my perspective. The reason why I say this is because if we’re looking at game A as who’s managing property and collecting value for our contribution, our production, and through the movement of stuff, then that’s game A. And so, the socialists and the capitalists are both, their argument essentially breaks down to who should own the stuff who should be the primary owner, if you will, of the value. But see, I identified that as the actual problem itself.
Jim: Yeah. I think you were absolutely right about that state capitalism, as the forms of socialism really have been just another form of game A just as you say, who owns the property, who owns the capital goods in particular, and you haven’t actually gotten to the problem. Now, let’s move on here a little bit. And this is again a key question that all people interested in social change ask, which is, do we reform the system as it is by voting for the slightly less evil mother fucker, or do we do something else? And you pulled out one of my very favorite quotes from Buckminster Fuller. You never change things by fighting the existing reality to change something, build a new model that makes the existing model obsolete.
Remzi: It’s a very popular quote. Obviously, a lot of people are using it nowadays. Bucky was obviously ahead of his time. If you read his stuff, the man is just beyond brilliant, certainly, but yes, you’re not going to be voting for a change, at least not in the present way. Obviously, I have a chapter transition that I talk about a little bit briefly about this kind of stuff. So I don’t personally believe that we’re going to be able to vote. So to speak, at least in the political arena. We may be able to vote theoretically, as a culture as a peoples on earth, but not through… It’s not going to happen through voting some politician in America or Europe or any of that. Because what are you asking them to change? That you can’t change yourself. That is, why can’t you propose it yourself?
Jim: Then I’m going to hit a cartoon that you posted in the book. Although it was pretty funny. It was 80s, 90s, double aughts, and 10s. I could make it in the 20s, but in the 80s, pick up your litter and save the earth, right? 90s recycle and you can save the earth. Double aughts. Reduce your carbon footprint. You can save the earth 10s or 20s or 30s, completely restructure global economic systems. And you may be able to save a remnant of humanity.
Remzi: That’s a damning description of our reality right now, consider the psychology of what our children are going through. Imagine you and I, when we were younger. Don’t even tell me that you thought the world was going to end. No.
Jim: Well, we had the nukes hanging over head.
Remzi: The nukes. But end in the sense that this is feels more real though. The nukes was obviously, it’s a real potential catastrophe. However, this is actually happening. These children really believe that the nuclear bomb basically was already thrown. It’s just going to take a hundred years till it lands, but it’s already been launched. And so, the psychology of these kids. I don’t know what they’re going through. It’s got to be terrible.
Jim: But I do remind them. We did have the nukes and we thought the nukes were real. I grew up seven miles from the white house and we just assumed there’d be a white flash and that’d be all she wrote. But it is true that we’re back to those days. And in some ways, in a more pernicious way that it’s not a bunch of rolls of the dice, it becomes up snake eyes, you die. As you say, we’re fucked, right? Unless we do something different. We keep doing what we’re doing. We’re just fucked. And kids know that today.
Remzi: Yeah. It’s sad. It’s not good.
Jim: Got a lot of other stuff we could do, but I want to skip over that and get to the plan itself. So, now as we start getting closer to the plan itself under your terminology in game A. We have three classes of people, masters, slaves, and the useless. It’s funny. I often throw out the fact that one of the signs that game A is just broken and depraved is how can the richest country in the world have thousands of people living homelessly on the street.
Remzi: People, right.
Jim: That’s horrible. I mean, no society, no decent society, no society anywhere in the world has ever done that before.
Remzi: And it’s not because these individuals, by the way, don’t want to play or don’t want to participate in society. It’s that they can’t, they literally can’t they don’t have any property. They don’t have any capital. They don’t have any assets. They have nothing from which to participate in this exchange game of trading that we’re playing. And so, they can’t play. And so, they’ve been rendered useless. And this is not my phrase, by the way, this is not my term. I don’t consider them useless. That’s a negative phrasing, Yuval Harari uses that term. And he calls these folks useless because those systems made them useless. Again, it’s no knock on these folks. They don’t deserve to be there. They deserve to be able to participate in society. How to whatever degree they want. And if that means, they don’t want to participate at all. So be it, they should have that right. But they should be able to survive.
Jim: And again, I’ve always used that as a metric is any proposed, what comes next? Any proposed game B. Is it designed such that there aren’t people starving on the streets, right? Or living like animals, that’s a fucking unbelievable that the richest country in the history of the world would have hundreds of thousands of people living on the streets. It’s just crazy. So, now we’re moving forward a little bit further. Let’s skip over generator functions and that kind of stuff, multi-polar traps, even that’s interesting, but we talk about that other places. So, next one of ideas thrown around by the tech Lords is UBI as the solution to all these problems. And oh, by the way, it probably wouldn’t take care of the homeless problem, but why is UBI not enough.
Remzi: Because of the nature of the game that we’re playing, creating currency like I mentioned is property. And so, one, you’re creating more of this property as UBI, and you’re introducing into the game. You’re going to affect the values and prices of things. So essentially what you’re doing is you have to continue playing this circulatory game and you’re going to have to figure out ways of redistributing the currency in order to be able to provide the UBI.
Remzi: But the problem is that the primary problem of game A is that it doesn’t seem to match production with ecological sustainability, that it doesn’t have any of those considerations. Well, if you provide UBI for folks and they have the capital to be able to purchase the goods to be that are going to be produced, there’s still no conscious production of efficiency of renewability. None of those backend production is addressed. It’s only addressed on poverty. So sure, you can give more money to people and you can provide more stuff. But is that going to change the trajectory of the ecological collapse? And I don’t believe it would.
Jim: Correct. That is correct. That is actually the right answer. Why UBI is not enough, which is it does not apply any breaks to the system. It does improve social justice a bit. I mean, again, the simplest way to do UBI, how how would you finance it? I got a simple way to finance it, which is 15% sales tax on everything. And that proceeds go back per capita to every individual. And so, the average person would get 85% of 15% of the per capita GDP, which is enough to live on, so it can be done, but it does not apply any breaks to game A. It does increase social justice a little bit. So, it’s a good thing, but not enough.
Remzi: If I may make a point about that though, as I mentioned later in that book is that while I’m against UBI in a game A circulatory system for the obvious reasons. I’m not against UBI as a potential transition strategy. It is possible that we can still use UBI as simply quickly to eliminate immediately ameliorate the problems of poverty for most people, while we make the transition into the new currencies system so that there is a possibility that UBI can still be beneficial and necessary upfront that said.
Jim: Doesn’t solve all the problems. I agree with you.
Remzi: Right. Our answer shouldn’t be let’s just do UBI and we’re done with it. No, you just added gasoline to the fire, and you didn’t put out the fire. And so, that would be terrible. That would be the worst-case scenario in my book. But as a system for the whole of humanity certainly will solve the problem of these individuals who are temporarily poor. But as a system, as a family, we’re still fucked if we did that only.
Jim: I’m with you 100% that I do believe it’s a good thing in the context of game A but it doesn’t actually solve the game A problem. Now let’s move towards your solutions, like a good architect. You start with a goal, and you put forth your goal at sovereignty opportunity and liberty, very short gloss on those three before we start jumping into the details.
Remzi: Sovereignty is the idea that you should be in charge of your life in all areas of your life opportunity is again, likewise that you should have the opportunity to participate in society in any manner in which you want. And then obviously liberty is likewise is you should be able to have the participation through society that you are responsible for your actions, but that you are in control of your actions.
Jim: Sounds like good things.
Remzi: And course, any of these terms can be bastardized and made negative. And anyone of course of Orwellian Speak can use proper terms to describe their proposals and whatnot in these glowing terms of freedom and sovereignty and liberty. But it’s the actual details in which the reason why I used this terminology is because the plan actually offers these things in reality.
Jim: I’m going to give just a foreshadowing here for the audience. I don’t want you to react because we’ll go into more detail later. You essentially break your plan up into two big parts. One is a currency system where you move from our current circulatory system of a currency to a flow-based system, and then a fundamental rethinking of property essentially. And so, people should keep their ears out for those two things, as we move forward. Before we do that though, do set a little ground, as you do, maybe talk a little bit about the game A model of owner, trader and consumer.
Remzi: Sure. When I came up Palm with my idea, as I mentioned in the book. I wasn’t studying Marxism. I didn’t understand game A from that lens, even though I was viewing it, obviously from that lens, because that’s what the world that we live in is through controlling resources and exchange and all of that. I didn’t have the terminology of the knowledge of the Marxist history, any of that, to be honest. I didn’t know any of that. I didn’t even know what communism was and I lived and was born in a fucking communist country. I still didn’t really know what it was at that time. So, when I came up with this idea, really what I ended up doing was I ended up tinkering with the economic equation, such that it fundamentally changed the manner in which value can flow basically money.
Remzi: And so, by redirecting the flow of currency, we can simultaneously then change where the initial value comes from. What is valuable? How does it flow? Is it only flow through our exchange, through possessions or does it flow some other manner? And so, when I realized that money itself was a fictional tool and that it can be created and distributed and flows and moves about because it’s fictional that opened the door for imagining the new relationship, if you will, of how things flow and are exchanged and likewise, and how value itself flows and is determined to the individual players in the current game A all value flows through exchange you and I, the only way we can capture value is through some method of exchange period. There is no other way you have to have something and trade it for something else. No one’s going to just give you the value aside from, of course, the modern welfare state.
Jim: Or the family of course, right? Your mother still cooks you dinner when you show up at Thanksgiving
Remzi: Yes, but there’s an exchange there. It was free for you, but not for her. She had to buy those things. She had to exchange something for them, and she gave them to you for free. So, nevertheless, so you can go move on from this.
Jim: We’ll skip over that little section. It was interesting about owners, traders, and consumers, but probably too much detail. I do want you though, to hit briefly, because I know all monetary cranks obsess about this and I’m certainly guilty of having done so in the past, and that’s a brief description of how the money supply currently works in game A. Very important that people know this and almost nobody actually has their shit straight. I would say you do. I didn’t find a single error in the way you described it.
Remzi: I appreciate that. Thank you by the way, okay now I’m going to say this. I studied money. I’ve been studying money all my life, as most of us have, of course, you and I more intimately than many others. You just said that I got it accurate. Believe it or not. There was pieces there that I was still confused about even just as recently, as a year ago. And so, even during the research through this book. I actually was missing something. But all money essentially comes from credit, which banks have access to issue credit in the game, private commercial banks, to whomever they want.
Remzi: But generally speaking, obviously for the purposes of making a profit, they don’t just issue this credit without securing it in some form or another, how do they secure it? Well, what they’re doing is they’re issuing you the credit so that you can then purchase some property that has value and so doing, they can be secured that they can give you this credit because if you don’t give it back to them, they just take your property and sell it and then it’ll be fine. But all money is basically created through debt.
Jim: And particularly it’s very, very important for people to understand that when a bank may want the one factor that they’ve somehow been managed to obfuscate about is when a bank makes a loan. They are not loaning the depositor’s money. What a bank does is they’re creating new money actually. And approximately 90% of the money in circulation in the United States and 95% in the UK, which is actually even more banking intensive than the US is actually created out of thin air, quite literally, by the banks. And they issue a loan and they just put new money in your account. However, when people often miss, and you do mention this though, maybe you don’t put as much emphasis on it as I would is that they also, when loans are repaid, whenever you repay capital on a loan, you are destroying money. Actually, the money disappears and it’s this modulation function that the banks have, which actually is good it’s one of the reasons why the invention of fractional reserve banking turned out to be this gigantically positive thing for humanity, particularly when it was in a very capital-intensive stage of industrialization.
Jim: Because the banks breath in and breath out. They breath money in, they breathe money out in the United States, other than mortgages, the average length of a loan’s about three or four years. So the whole money supply actually turns over every three or four years, which allows money to be reallocated from one sector to another. It’s pretty cool. On the other hand, there’s some problems with it built-in negative and positive feedback loops. Unfortunately, when things started getting hot, the banks say, “Oh, I can make more money by inventing more money, putting it out there.” Well, we’re all going to get rich on the interest, right? Well, so the money supply grows, the economy overheats beyond what the real needs are and the capacity of people to execute prices go up then guess what it crashes. And then the banks overreact. They call in loans, even very sound ones, right?
Jim: And so, the working money supply decreases, and essentially, I’m pretty convinced after having read 150, 200 books on this topic, 500 scientific papers written computer simulations, that if it was not for this very interesting invention from 1694, our business cycles would be much milder. The recessions, the booms and the busts would be much, much milder than they are due to this institutional structure.
Remzi: But there wouldn’t be as much productive capacity credit has the in interesting ability to induce production to begin things. So, one other point I’d like to make though, is that with this whole money thing, is that, initially what you have is you’ve got the initial thing of value the resource itself, right? Let the trees of the US, the cotton, whatever it was the initial people, the owners extract that initial property of value that then becomes money that becomes wealth, so to speak. And then the bankers with their credit are able to then give more money to people who already have existing money.
Remzi: The existing money, it all started from the value of the property. And then that of course got transferred over to this other physical property called gold. And then we used that as the basis of accounting in wealth. And that we measured that as wealth. And so, what did the country do? The country would issue this paper currency to begin the game of circulation with currency but being backed by the physical gold. Now what the gold represents is the same as the other physical wealth of the world, right? A house is wealth, a train is wealth, a car, all these things that we produce are valuable. They are worth something. So, they add wealth to the world.
Remzi: And so, currency is just used to essentially trade exchange that wealth. And so, we’re playing this huge game of capturing wealth through the stuff. But the primary source of wealth itself is still, even though, as we say, banks are issuing credit and creating money out of thin air, so to speak, they are. But so too, do people the primary extractors, so for example, Saudi Arabia, the people who own the oil they’re extracted, where, how come they get to keep the value? What did they do? Just because they were born there, and they claimed it for their family. Come on, that’s a joke.
Jim: As you say, finders, keepers, losers, weepers, right? That’s been essentially the base law for a long fucking time. Right? So, and by the way, if you’re a little stronger, you just take it away from the other guy and now it’s yours. Right?
Remzi: Right. So, if you look at this problem of the game that we’re playing from through a family perspective, you would immediately recognize that what these people are doing is they’re claiming things that aren’t actually theirs. They’re the families. They just took them from us. Who does the Amazon Forest belong to, belongs to all of us? Why does only some people in Brazil get to decide or some capitalists who bought the land from the people from Brazil? So, the whole game of primitive accumulation as Marx called it. Is the beginning of the problem of the game. So right there, where all wealth in the world comes from is the earth period. What’s valuable in the world. The stuff, the things.
Jim: Well, yeah. To my point earlier, since a long while value-added is also hugely important. You can have a rock and a stick and some sinew, but it takes some cleverness to put the rock on the stick and connect them well. So, it doesn’t come off when you chop a tree down and that’s important too, that’s sometime underestimated in the formation of real.
Remzi: We go back to the debates of what Smith and Marx and all these other guys we’re talking about. Where does this value come from? Why is this so valuable.
Jim: Yeah. The famous labor theory of value, which isn’t quite right either.
Remzi: Right? Yeah. What about the labor? So, but see, no, one’s going to not say… Okay. Both are true. Labor is valuable, duh, but so where’s the stuff. Both are valuable. Okay. Do you agree on that? My point is, why are we distributing value? Why are we determining value and distributing the value tokens through only the value of stuff?
Remzi: Distributing the value tokens through only the value of stuff, through exchange. That’s nonsense to me. at least it’s not necessary any longer, considering that we have digital tools of record-keeping that can overcome the trust issues that physical currency used to provide. That’s what gold was. It was a physical representation, something that you can trust. You knew that this thing, ’cause it was real, right?
Jim: Yeah. You could calculate the densities, the Archimedes’ Principle, and make sure you weren’t being ripped off by adulteration, et cetera.
Remzi: But we don’t need to do these, we don’t need to play these games of valuing only the property. Property has value. We can still have prices. We can still use prices to determine allocation of resources and distribution of resources and all that. However, how we distribute the value token to the individual who can then participate in the market, decide what they’re buying, where to, those can be separate now because we have digital tools to keep records. We didn’t have that a hundred years ago. There was no way these guys could have ran a Game B in the form that I’m proposing. Because some people actually had this idea of using different currencies of maybe not a flow currency, that I’m talking about, but they did have ideas of the currency… What was it called? It would lose value over time.
Jim: Demurrage, et cetera.
Remzi: Yeah, demurrage. And all these other notions so that they can kind of prevent some of the problems of inequality and accumulation of the value token itself. But nevertheless, the game itself was still determining value to the individuals based on exchanges of property. And that’s the problem. We don’t need to do that.
Jim: Yeah. And that’s a very good point. I’m going to use this as a point to hype my own earlier solution a little bit. I have a talk at the Santa Fe Institute, on dividend money and alternative to central bank or managed fractional reserve banking money. And I will say it is insufficient, and I wrote that in 2015, and I would write something quite a bit more radical today. Maybe not quite as radical as Ramsey, but more radical than that. But it’s worth a look, and it addresses many, many of these issues, but comes to a more conservative conclusion. And then with that, let’s hop over to… We’re getting closer to the punchline here folks.
Jim: In Game A, as we talked about before, money dominates everything. Circulating money, right? I put money in, and I want money back. In Game B, your version of it, you basically propose that money moved from being this circulating thing to a flow thing. And I must admit there’s some parts of the mechanics I’m not a hundred percent sure on, and we’ll get to those. But before we get down into the mechanics, you divide the flows into basically three buckets. One, you call UBI. The other you call proof of value, and the other you call bonus. Maybe you could talk briefly about that, so people will know what we’re talking about when we reference them going along.
Remzi: Sure. So in the last few months, and since I released the book, I’ve been working on creating, writing a summary with infographics, to explain some of these flows, to make it easier for people to quickly grasp these concepts and see exactly what the hell I’m talking about. So that it’ll be easier to understand. And I apologize for not having finished that in time for this interview, it would’ve really helped. But nevertheless, essentially, the difference is that in a flow currency, we can issue the currency to individuals as a UBI, which is fair, equal to everybody. The UBI should be an amount that is sufficient to, generally speaking, to be able to purchase at least the basics of food, some clothing, and some entertainment, right? The minimal, bare minimal, so to speak.
Remzi: And then the second one, the proof of value, is essentially is that when you do things in the world, and everyone does things in the world, right, you’re going to live, you’re going to play, you’re going to work, you’re going to learn. When you do those things, you’re going to collect more value. And it’ll be fair. It’s like a menu, right? Given certain things or certain ages would collect a certain value.
Remzi: And there’s some flexibility there, but nevertheless, so it’s fair, it’s equitable. You get to decide when to learn, how much to learn, where to play, how much to play, where to work, how much to work. So all these things can be done in a fair playing field, without you having to worry about running out of money, because you’re getting UBI. You can always participate to get more if you want more. And then the third one, I think I called it… What was the term?
Jim: Bonus. Bonus.
Remzi: Bonus. Essentially it’s profit basically. But profit… I think I used the word bonus instead of profit because people generally think of profit as this equation of buying inputs and then selling it. And then that’s the difference between… Your costs in your sale price is your profit. Well, that is only one measurement, right? So we don’t necessarily have to distribute the bonus, which is the profit, simply based on that equation. That can be a part of it, but we should be able to measure other elements of the production process. Like Kate Raworth is doing with her doughnut economics.
Remzi: Things like efficiency. Did the enterprise, can they reduce the amount of energy they’re using? Can they reduce the amount of materials they use? Can they recycle these things? All these other metrics that we can incentivize to incentivize production so that it can be better, so it can produce the things that we actually want to produce. Not just a singular equation of profit that we have today, it’s so silly.
Remzi: Anyway, so by distributing the currency in those three methods would assure that a person would never run out of currency. You would always have value to use, to acquire some good that you want from the market. You will always be able to buy food, clothes, have access to activities, travel. Whatever it is that you want, it’s there for you. And if you want more, well then you know what you need to do. Just go work more, right? Or participate more, and then you’ll have it.
Remzi: But the neat thing about this currency system, the flow currency, is that because it’s flowing directly to you, it’s not circulating to you from somebody else. You didn’t get the UBI through redistribution. It didn’t come to you from somebody else’s pocket. Okay. And likewise, with the proof of value, the money that you got, the currency that you got, didn’t come to you from somebody else’s pile, didn’t come from a bank. It didn’t come from a capitalist. You got it. You collected it directly, because it’s direct value recognition for your contribution to the world. You as a human being, you’re valuable. All you have to do is do things. You collected the credit directly.
Remzi: Now you’re collecting this currency through these participation things. You’re collecting it through the production process of doing good things, and your peers are all measuring these things and creating the bonus metrics, et cetera. You’re collecting all this bonus. Now you’ve got all this money, right? And so if it’s not circulating… So it’s not circulating because when you go and purchase something, you go and buy a shoe, some shoes or clothes or car, whatever it is that you purchase, once you purchase that item, the money then simply disappears. It doesn’t circulate to the people who produced that car or the shoes, because it doesn’t have to anymore.
Remzi: Those individuals, you might recall, the actual people, not the corporation, forget about their corporation for a moment. It doesn’t exist, technically speaking. Forget about it. Forget about the fucking country. Doesn’t exist. The only people who need to collect currency are people. And because the people in the production capacity are already recognized for their contribution and their value, they’re collecting it. The money doesn’t have to circulate from me to them in order to pay them. We recognize their labor, they collect it. They in turn use it to buy whatever they want to buy from the market or stereo or whatever, the money deletes and it’s gone. And there’s no issues of the problems that we have today of utilizing the money to manipulate one another, to control our own labor. So that is completely wiped out.
Jim: And I have to say a very innovative idea, this idea of the money goes directly… Let’s say it goes from the central ledger to my personal ledger. If I spend it, it disappears. And then new money is issued again. That’s a very radical idea.
Remzi: You can never run out. I mean, kind of like today, you can’t run out of money even now because it’s fake. It’s credit. There’s no limit, technically.
Jim: Yeah. Modern monetary theories, they just keep on cracking. That’s going to end up a disaster. But that’s another story for another day.
Remzi: The only limit to the modern money creation is that that has tied to the real world, obviously.
Jim: Yeah. So I think I understand it. So it’s created magically on the ledger. Everybody has an account, which they had to go into some detail and proof of humanity, et cetera. Let’s assume that works. Hackable probably, but-
Remzi: No.
Jim: We police it enough, it’ll be good enough. Right? Always a little bit of scammer at the edge, but we can tolerate that. Comes into my account, I buy shoes. The money disappears, literally. That doesn’t circulate back to the person that provided me the shoes. Right? So now let’s track it back the next step. How did the shoes come into being? Why would anybody create shoes just out of the goodness of their heart, if they’re not going to get paid for it?
Remzi: They’re not creating it out of the goodness of their heart, remember. They’re creating it because they’re involved in the production process, because they like doing what they’re doing. They want to do something. And so in the course of you doing something, that’s value creation right there. So they don’t need the money from you because they already got it from the work. Now if they don’t produce, if nobody produces anything, we’re all just doing nothing, well, guess what? We’re going to die. But no one’s going to… You’re going to be able to see everything that’s being done, because we’re working on a shared ledger. We’re able to manage and account for all of the resources, where they’re flowing, who they’re flowing to.
Remzi: Now, these resources, they still have price. We’re still using a currency. There is still accounting. But the point here is that the accounting during the production process doesn’t determine the value flow to the individuals, by solely. It’s one of the metrics, sure. Like the profit metric can still be a metric on which companies are doing better so that we can say, “Hey, look, these guys are better than you guys. You guys, according to the accounting, we don’t need you to produce this anymore. The resources are not going to flow to you any longer. You can’t afford it because your accounting says you’re negative, therefore your operation has to shut down”. So it’s a mechanism of being able to still kind of close down a production process that we don’t need, that the market doesn’t want, have a need for, desire for. And then also open up ones that they do want.
Remzi: Because if you see a need, that’s not being met, you are incentivized. Not only are you incentivized again for your proof of value, your actual labor, but there’s a bonus, too. By you producing something that people want, you’re going to get even more money for that. Not just the money though, Jim, as we know. You’re not just getting money, dude, you’re getting recognition, you’re getting respect from your peers. So we know that what’s valuable in the world, obviously it’s not just the resources. It’s our relationship with one another, our status, all these other things that you can’t quantify through the currency and through the value measurement.
Jim: But something I would add to your system in a version 2.0 is some formal recognition for those kinds of things that are orthogonal to the actual currency system. But that’s another story for another day. So now we’re getting to the meat of the matter. And of course the classic pushback on systems like this is, you know what the question is, the calculation problem, right? Which is the holding, started way back but it was most clearly stated by Ludwig von Mises in 1922 in a paper called The Calculation Problem, which says that figuring out what to make, how to allocate labor, allocate resources, et cetera, is the problem beyond central planning, beyond any form of coordination, other than edge calculations.
Jim: So that the participants themselves make the decision, “Hmm. There’s not enough shoe manufacturers in the United States. I’m going to start a shoe manufacturer. And by my guess, by the time I buy the leather, buy the other materials, hire people, pay the middleman. I can make a profit.” So there’s a signal that goes all the way from the transaction, back to the decision to organize the work. And even what kind of shoes to make, right? If I make like Russian style, clunky grandmother shoes, no one’s going to buy them. And famously Russia made as many shoes as the United States, but nobody wanted them right? ‘Cause there was no signal back, no subtle, real-time signal back. And so that would be, I would say, the first pushback here. How does the decision to make shoes, particularly shoes of a specific design, a specific mix of sizes, colors, et cetera, get made in a system like this?
Remzi: So it’s a dance between the consumers and the producers, right? The consumers are telling you in two ways. And number one, they may be pre-telling you, “Hey, look, I like red shoes, or I’m going to want to buy a TV in six months, or this is what I’m going to be purchasing. This is kind of the goods that I might need.” So you can kind of guess all that stuff. But at the end of the day, there’s also information through the market of what’s being purchased. What are people actually… Forget about what they said they wanted, what are they actually buying, right? All these things are happening through the market.
Remzi: Now the same mechanism that Game A use is this profit incentive, right? Just like saying, “Hey, look, if you take the risk, if you are willing to go out there, you can make more money if you do all this stuff.” And it’s the same thing in my version, except that there’s no risk. The risk is that you will fail, and you can’t continue doing what you wanted to do or produce, because you suck and other people are better than you. But the reward is the same, in the sense that if you do this, you can make more money.
Jim: Through the bonus, through the bonus, all right. [crosstalk 00:59:49] Here’s an idea I had while I was reading this, I actually wrote it down in the notes. Which is, if we think of three knobs, we have a total amount of this personal credit flowing in the three buckets, UBI, proof of value, and bonus. If you can adjust what percentage goes into which of the three buckets, and if you put all of the money in the bonus bucket, it’s essentially game A, very damn close to it, right?
Remzi: No, no, it’s not because again, it would still be a better game. No, because the currency would still be flow in this manner. Remember the bonus is based on accounting of trade, of exchange, like the prices of the stuff. So there’s a number there, there’s accounting there, but the bonus itself isn’t solely determined just by the actual accounting. There’s more to it than just that, it can be more complicated [inaudible 01:00:40].
Jim: Essentially I’m going to have to do a thought experiment. Later, what would happen if you took Remzi’s model and put it a hundred percent into a bonus, how would that work out? It’s just interesting.
Remzi: Well, these are the kind of things, Jim, that I’m hoping that are possible, and they probably are, to simulate.
Jim: Well, yeah. We can certainly simulate.[inaudible 01:00:54] I’ll talk to you about and do that actually, if you’re interested-
Remzi: The key here is that the primary thing I think I want to show the world, or introduce to the world, is this idea that currency should not circulate as property. Because it is in this form, in which we all are basically fighting and trying to kill each other for and manipulating each other over control and access, because that’s the only source of value. But by removing that, that’s the secondary, obviously we want to produce, and incentivize people towards production and distribution, and we need an allocation system of prices to be able to determine where to allocate resources. Those are all true, but that’s why we have a pricing system. That’s why we’re still maintaining a currency. However, we’ve separated it from the mere equation of profit.
Jim: And this is all very interesting. Again, the classic challenge is that the reason for circulating money is that it provides a free signal on what to do. And so the question is, do you have an alternative way to get that signaling good enough that you don’t end up like the Soviet Union, which had every resource known to man, Russia has more natural resources the United States does, and yet they couldn’t get their shit together because they couldn’t figure out this coordination problem. And circling currency is a singling modality, is really all that it is. And there’s giant value from that signaling modality. I just want to drill that a little bit.
Jim: So let’s go next to another question that I had. Your proof of value, i.e. you’re being paid for working. You get a UBI, whether you want to sit around jerk off all day or not, right? And then if you do decide to work or go to school or something, you’re paid a POV. Now, this is again, you address it -ish, but some work is more desirable than others, right? And yet, on your scale, it’s based on a menu of what kind of work it is, how skilled it is, but it’s not really fine grain. And they turn out way more people want to end up being yoga teachers than working in a shoe factory. And again, in circulating money, the Von Mises problem, well, guess what, if there’s too many yoga teachers, there ain’t enough students very quickly. They go out of business and they stop being yoga teachers.
Remzi: Well, same here, just because you are allowed to do whatever you want to do, that doesn’t necessarily mean that the market or the community actually values that thing. And so the difference between of course this and the central planning of this is… Not central planning, of the… This should be a combination of central planning in the sense of centrally managing how much resources to extract from the earth and where to extract them, but where to flow those resources isn’t planned, isn’t determined by some agency, like it was in Soviet Union. “We’re going to ship this many trees or this many shoes or rubber,” or whatever it was. No, this here, it would be individuals. It would be individuals within communities who are doing these things. And so they’re able to start an enterprise, corporation, whatever.
Jim: So let’s [inaudible 01:03:54] walk down this road. It kind of gets into the next part, which is the community credit part. So if you want to talk about community credit part a little bit, you can do that in this story. So two people decide they want to start a yoga studio. And so they get together. And as I understood your community credit piece, they come to the community and they say, “We need a little resource.” So the community’s bank of space, community says, “All right, this sounds sort of reasonable. Let’s create a yoga studio. We don’t know if we have too many yoga studios or not, because we don’t see a price signal. There’s no way to know if we have too many yoga studios”.
Remzi: Well, you can, because you have digital mapping technology that maps and tells you everything that exists in the world, even in your community, instantly.
Jim: Okay, that’s a good point. So we know how many people are currently using them. How many people are doing yoga every day, at least willing to pay for it. Right. And so we do know that. So you make some extrapolation, is it reasonable to add another yoga studio. So let’s say you do add one. Well, it turns out that these two people suck at running a yoga studio. You know, they just don’t know enough about yoga. They’re unpleasant. They don’t keep the place clean. They just suck. Right. And so this thing has been authorized by the community, has been given space, has been given a little startup capital, and here’s the important part. It’s now hooked into the POV. So the two people that run this yoga studio get paid for showing up every day, even though they’re doing a shitty job. How does the cycle close, and they get shut down?
Remzi: The exact details will vary from community to community, because the idea here is to allow communities the maximum opportunity within this flow currency system to do things how they want. So they may actually do things differently than other communities. But generally speaking, though, Jim, the users, the people, the students, so to speak, of the yoga studio will essentially have some kind of mechanism to tell you, “Hey, these guys suck.” And through participation, if they’re not going to that studio anymore, they’re going somewhere else.
Remzi: Well then the resources, the calculation of the resources, they’re still there. We’re still calculating the prices of the resources these individuals are using. They’re still in accounting, but that the individuals themselves don’t have to suffer the loss, so to speak. If they risk, because they’re risking… Like in today’s world, as an entrepreneur, you are risking every time you’re starting a company, there’s risk there. But here, there’s risk here too, but there’s no risk of loss. There’s only risk of you sucking and getting shut down.
Jim: That’s good. That’s good. Okay, this is helping. So let me build the model a little further. So a virtual P&L is created by the computers in the cloud for every unit, and Two Fools Yoga Studio has the costs allocated to it of an imputed capital cost for the space. Plus the POV being paid to the two instructors and oh, guess what? Nobody is paying for the service. So the P&L is a minus $12,000 a month. And so then there has to be a governance mechanism, which says, “This is a naive reading of POV. It says, you do whatever you want and we’ll pay you per the menu”, right? Well, that’s true until someone stifles one of the organizations. It says Two Fools Yoga is a completely sucky thing. How does it get killed? One of the beauties of capitalism is it gets killed automatically. It runs out of money.
Remzi: Well here too, it would run out of money because those two brothers, morons, whatever, while they may have the space, because they may have already leased out the space for free from the community, may have already agreed to give them the space for a year or two. Right. We don’t know. And let’s say it’s a year. But it turns out these guys suck, but the community can’t get rid of them before the year is over yet because they still have the lease for the year. And we gave them. But here’s the thing though, Jim, they have a credit account, right? So they still have some things that they need. They may very well have at some point, the energy may be free, the water may be. All these other resources because they’re plentiful, they may end up having them for free. But there’s still going to be a cost of stuff, right? They’re still going to have to buy equipment, some balls or-
Jim: Not much, that’s why I used a yoga studio. You know, you don’t need much, right.
Remzi: You’re right, they won’t.
Jim: You’re getting your POV. You’re getting your salary for not doing dick and not investing anything and being a fucking fool! How do I stop them getting their POV?
Remzi: That’s exactly right. So that enterprise, the two yoga instructors may continue to collect their proof of value through their labor, but they won’t get any bonus because none of the customers like them. Relative to the other yoga studios, they suck. And so the others are going to get the bonus, there’re not. And so there’s no profit for them. And if there are any physical materials that they actually need for the studio, anything they need to buy, and because they’re not profitable, they’re going to have to buy it from their own pocket, and they won’t want to do that.
Jim: Well, it depends how big the POV is. Again, this gets to this ratio question. If the bonus is way bigger than the POV, it starts to look more like the solution to the calculation problem, to a degree that the POV is much bigger than the bonus and looks more like salary. Because most businesses, salary costs are 65 to 70% of total revenue, right? So if POV is, about the size of salary and the fools will just sit there, collect their salary, not do dick, no one shows up and they sit there and watch internet porn all day. Right?
Remzi: This is a problem that is solvable with the flow-
Jim: … Watch internet porn all day.
Remzi: This is a problem that is solvable with the flow currency system, though. And again, not every community is going to say, “You can have the place, regardless of the accounting, for the whole year.” No, they may say, “There’s a mechanism for us to remove you from that space, if the community so decides. If it turns out your service is not wanted by the community, and we have a limited space availability for other activities and whatnot, that other people wanted to open up, we’re going to shut you down, and give it to somebody else.”
Jim: That’s my point. There has to be a kill switch on bad companies, right?
Remzi: There can be. Remember, the idea here, though Jim, if you noticed, I separated it into three different communities, is to allow the local community to make those decisions. The more closely that we allow individual people, and their local community, and so on and so forth, to make decisions, the better.
Jim: I agree with that. That’s a game B principle, subsidiarity. The closest to the people, the better. Promote as much as you possibly can tolerate, and a little bit more.
Remzi: I like what you said there, because what you’re alluding to is that, yes, while I haven’t modeled the numbers, we can change the numbers of the UPI. We can change the proof of value numbers. We can change the bonus allocation. So, all these things in this formulation are changeable as necessary. We can prevent any issues. Like you just mentioned about these morons doing nothing, but they’re collecting value when it’s not really valuable. That’s not right. We can fix that because remember we control the value points.
Jim: Yeah. But, the way you describe POV, it’s got the menu base. So you can’t change their salary, but you can shoot them. And so I would suggest adding to your system, the kill switch. That there’s some mechanism by which enterprises can be killed by some democratic process, or even some algorithm. They’ve taken on no revenue for two months and they’ve collected their POVs. And it’s a kind of business that if you don’t have revenue in two months, you obviously suck. So therefore, you die.
Remzi: Exactly. You happen to pick a business that basically doesn’t buy anything and doesn’t have anything.
Jim: Why I picked it. That’s why it was a fair.
Remzi: But, but we answered it. But, but generally speaking, the majority of the enterprises have inputs that they have to pay for. And so, there isn’t accounting. And so they can run out of credit and not be able to continue. And so, the credit just like in capitalism, it does determine what continues and what doesn’t, naturally, without the community saying, “Well, we think you guys suck.” No, the market said, you guys suck. It’s not us. The market’s telling you stop.
Jim: Yeah. See, in this case, it won’t, because they’ll collect their salaries. They won’t do dick. And so you need, they need an alternative method to kill.
Remzi: No, it will though. Because like I just mentioned, they won’t be able to continue to purchase things because they ran out of credit.
Jim: Yeah. Except for the Yoga studio, you don’t need it
Remzi: Oh, no, the yoga studio…
Jim: Let’s move on. Let’s move on. No system is perfect. I caught you on one corner, okay, so you need to fix that, but that’s all right. But, that’s not bad, right? So now let’s move on to the next layer, which I also thought was very clever, is this concept of community credit. So, you have credits that flow directly to the person for buying things for themselves. And then, if I understood it correctly, and correct me if I’m wrong, the community credits also go to the person, but they have to then be sent from the person to a…
Remzi: Enterprise.
Jim: It’s called legal entity that represents them in some sense. So, you mentioned three levels, I think you probably need more three, but that’s right. You have your face-to-face community. You have the equivalent of your county and you have the equivalent of the state, something like that, three different layers. And those get money from the central money machine, every period. And, they have things they’re supposed to spend money on. You give the example, and this is a very important one, it’s a big number, education. Somebody’s got to be responsible for civilizing and uprising children. Otherwise, you end up bunch of goddamn savages. Now we need something better in than our sausage factory, horrible state indoctrination schools. But, to get really good teachers is not inexpensive. For a county level government in the United States, the number one expenditure by far is education. So, that’s a good test case. So let’s say your test, maybe regional is where education happens or maybe it’s local. I don’t know, but some fairly substantial amount of money’s got to flow into these legal fictions called regions, et cetera. So, talk about that a little bit, how that works.
Remzi: So, the idea is that see, in Game A, world, because everything’s circulatory, the community, the city and the state and the country, et cetera, has to have money in order to buy things. Because, we need roads. We need all these things and somebody has to pay for it. In the equation of capitalism, there’s no ability to make a profit doing that. So therefore, the money has to come from somewhere, and it comes through taxes.
Remzi: So in this system, what we’re saying is, okay, since we’re already distributing the currency directly to people, we’re flowing the currency directly to individuals, we’ll call that personal credit. That’s your money that you can use to participate in the market to decide what you want to purchase and where you want to spend your time, like some activity or sporting event, concert, whatever.
Remzi: And then likewise, communities also have to buy physical things. They also have to buy materials for the schools, buildings and, cement, et cetera. So, how are they going to get credit. So then I decided, okay, why don’t we just give it to these communities directly? So, what I did is I separated into three separate piles. I have a pile for the local community, and that can be small village. It could be a city. It doesn’t matter the size because the numbers, the way that I calculated the flow of how much community credit this locality will get is going to be fair no matter where, because it’s based on population. And so, it won’t matter how big or small your community is. Generally speaking, you’re going to have an equitable flow of currency directly to you and access to resources.
Remzi: So, we’re going to flow a certain amount of credit, a UBI, basically, for the city every month, based on population to a local region. At the same time, we have another pool for the region. And then, the global. And the reason being there is that some of the monies that is used to allocate the resources of the world will either benefit the local, the regional, the global. And so, it wouldn’t make any sense for a local community to allocate their personal money that mostly benefits the region or the globe. And so, that’s why I created the pools of a region and the globe as well. So that those enterprises or the development projects that we want to do, let’s say massive solar farms or whatever, those benefit the whole world, they don’t just benefit a local community per se. They could benefit the region.
Remzi: So, why should only a local community use their limited resources instead of the region. Now, the difference between the personal credit and the community credit is in the language, the personal credit is only for you. It can’t be transferred from you to somebody else. But, without an exchange. So you use it in the market to buy a finished good, a book, a computer, TV, car, whatever. Once you bought it, the money has disappeared. However, you still own the thing. You still own the book and the TV. So, you could trade that TV with somebody else, for its value, for their personal credit.
Remzi: Now the community credit not only flows to your local community, the region and the world, but, here’s the best part. I think this is fun, personally. We also give each individual a UBI of community credit every month. So, you can’t personally use this community credit to buy your TV for yourself. You can only use it to either give to another enterprise or to use in your yoga studio. So, if you wanted to be a yoga dude and you wanted to maybe buy TV for the yoga studio. You can use your community credit to buy that TV. Now, when you do so, though, by the way, Jim, when you’re using that community credit to buy the TV for the two fools yoga studio, the TV is a piece of property, now, that is owned by the two fools. But guess what, who owns the two fools? The community does,
Jim: Yep. I did follow that. That was, I thought quite clever. And I call that whole style, “Color of money.” That one of the beautiful things about computer based money is that money can have color. As one of the examples in my system, I talk about political money, for instance, that every citizen gets $10 a month. And the only thing that money can be used for is to be given to a registered political organization for either lobbying or a candidate. And oh, by the way, those entities may only take money of that color, so that the welfare mother is equal to the Koch brothers in terms of their impact, because there is some benefits to money in politics, but only if everybody has the same amount. And what sucks is that in our current system, the big fish have way bigger voices in the money in politics game than the little fish.
Jim: So, I call that the color of money. And I like to see that in a system, because it takes advantage of what we could do. We’re kind of move along here in time, but we covered the most important part. Let’s get to another part though, that I think is very good about your system. I have to think about it some more, but I think it’s really generative. And, that is, how does one start a business and what do you not have to pay for that people traditionally pay for in their businesses IE, making it easier to start.
Remzi: Well, generally speaking, you won’t have to pay for office space, factories or warehouses or any of those things for your enterprise. Because in most cases, well obviously for the things that already exist, there’s no reason to have to pay for that. They already exist. Machines. If you’re already an existing factory, so to speak, you already exist. You already bought the stuff, so to speak. So, you obviously don’t have to pay for those things. However, because there is an accounting of prices of all the stuff that’s moving around, that’s why you’re using the community credit. So the community credit is going to determine your profit is basically just is the community credit. So, the more your enterprise profits, the more you get to keep that currency.
Remzi: And so, the more currency you have, the more physical stuff you can buy, but you won’t need to pay rent for your office, for example, because it already exists. Who owns it? The community, well, the community doesn’t need your money because they’re already getting money through the community credit as a UBI. And so, the money’s flowing to them. They don’t have to have taxes. They don’t have to rent the building anymore.
Remzi: The community owns the building, assume that the community already allocated their community credit to build the building. Now, if you don’t have enough buildings or factory or warehouses or whatever, trains, then your community will simply use its existing community credit. And remember, individuals also are getting this community credit, too. So not only does the community have their own pile, but so do people, so people can flow their community credit wherever they want in the world.
Remzi: They’re not restricted to only giving it to their local town. They can give it to their town, their region, or some other town, somewhere else in the world, or even the globe. It doesn’t matter. It’s theirs. They can do whatever the hell they want with it. And, because they can’t spend it personally, the individual, as I mention in the book, we can allow that currency to transfer from person to person. So, we can still have these stupid games of betting and gambling and all this other bullshit that we have, because it won’t destroy a person, fundamentally, their ability to participate in the world and in the market, because it’s not their personal credit that they’re giving away. It’s the community credit. And so, who cares who has it and how it flows. If you want to be irresponsible and bet and gamble your community credit, so what? It doesn’t hurt the community. The community’s still going to get that credit somewhere. It’s just that you didn’t get to decide where it goes. Somebody else did.
Remzi: So, the enterprise won’t have to pay for rent. They might not have to pay for energy costs if it’s sufficient, if there’s no cost to it. Some cases they will be. But, they will have to pay for anything physical that they need. All their inputs. If you’re a factory and you’re making bread, whatever, you got to pay for the wheat and all the grain and whatever you need. So, there’s a cost there and you’re using your community credit. You have an account. And so, you pay for all that, but there’s also a price that you’re selling. And so we can determine the profit mechanism.
Remzi: Now, some enterprises are not the same, just because a particular enterprise that’s making bread, let’s say their accounting doesn’t show a profit because bread seems to be easy to make and plentiful and it’s cheap and it doesn’t seem to be producing a profit, so to speak, for the enterprise. None of the bread makers are profitable. Well then, we just reduce where the baseline number is, so to speak, to determine the bonus, the actual profit, if that makes any sense.
Remzi: It’s okay if you’re on an accounting basis, if your enterprise is supposedly losing money, because we’re not playing the game in a circulatory regime. So, it doesn’t matter if you’re profitable from that perspective. The only thing that matters is whether you’re profitable in the sense that the community needs or wants what you’re actually producing. And so, ultimately, the accounting’s going to reflect that. But in terms of your costs, your only costs really are your inputs.
Jim: And the key thing you didn’t explicitly mention, I don’t think, is you don’t pay for your people. And again, in most businesses, your payroll is your biggest business expense.
Remzi: Now, hold on, So yes. You’re not paying for your people though, but earlier you mentioned this, and you alluded to this and this is the genius of this, by the way, this system, I think. This was all by accident. Kind of like step by step. And, “What if we do this?” So, these are thought experiments. These are questions that I asked myself that led to this, but now that I see it, of course, what it does though, Jim, is, even though you, as the enterprise, don’t have to use your credits to pay for these people, the cost of the labor that that you are paying these people is a part of the bonus.
Jim: Yeah. Virtual P and L. I figured that out.
Remzi: Okay, good. So, there is still an opportunity for some business to say, “Look, we are more profitable. I can pay people more.” And so, there is an opportunity for them to increase the proof of value for those laborers, to make sure that they are able to attract and incentivize a labor that needs to get done, basically. So there is a P and L function there, but you’re right, from a personal perspective, the people who began the enterprise, none of their personal credit is going to be going to pay for the labor. Period. Ever, which is beautiful. So, they don’t risk their own personal wellbeing.
Jim: Yeah, and of course, you’ll end up with more bad businesses this way, but that’s all right. That’s not the end of the world.
Remzi: Possibly.
Jim: As long as you have ways to kill them, quickly. So I would say, spend some time thinking about the kill switches and the system will produce people who want to do X, but that’s okay. And again, think about all the waste we’re getting rid of. We’re getting rid of all the bankers, all the fucking real estate goddamn brokers. How many kinds of useless parasites we’ll be getting rid of, we can afford to take on a little bit of inefficiency elsewhere.
Jim: Okay. Very cool. There’s lots of decisions that have to be made here, from the example of, oh, there’s only one office left and two people want to open yoga studios. How do we decide. Or, we got a bundle of regional credit. How much do we want to put into schools versus police versus picking up the trash. So, there’s always decisions.
Jim: And you have a little section on how to decide, and you call it democracy. I would just point out that I’m not a hundred percent sure that we should be so anchored on democracy. I had a very interesting podcast with Forrest Landry, recently. And one of the things we talked about is the negatives of democracy, in particular, because it, by definition, divides people. If something comes to a vote, no matter what, no matter how you chose to vote, there’s people who won and there’s people who lost and that builds animosity. And, there’s a game theoretical thing that goes on, which is each side tries to build coalitions. And we end up with the shit show we got.
Jim: What he proposes is this very interesting, odd thing, which is a mixture of consensus, dictatorship, and democracy where every job or every, he calls them executive, is created by consensus and only by consensus.
Jim: So Remzi’s appointed dictator of the farm, right? And you have absolute power to run the farm until a democracy dis-powers you. The only thing the democracy can do, 51% of the people in the village, say “Remzi, you’re fucking tomatoes suck. You’re fired.” And then you’re fired. And then it goes back to consensus and consensus chooses the new executive. So, there’s an example of a non-democracy seemingly reasonable operating system. But nonetheless, let’s use the word democracy and you list some of the interesting ones, participatory democracy, deliberative democracy, direct democracy, which could work just fine in small communities and my favorite, liquid democracy. So, maybe give a little bit of thought to how are decisions made.
Remzi: Okay. So again, generally the idea here is to allow decisions to be made from the individual on up. And so, the more that a decision impacts you, the more say you should have, and that’s the kind of democracy that I’m imagining. Now, if a decision doesn’t involve you, let’s say, for example, obviously what to do with the money of a town which you don’t live in. Well, you don’t have a say, obviously. They’re not going to give you a say. But, the neat thing about this formulation of currency, this flow currency, the reason why it doesn’t have the same problems of democracy that we have in Game A, is because, ultimately, we are still allowing individuals and their compatriots, and the local community, like you mentioned, who are going to decide what to produce and how to produce. But, once the individuals decide certain locations may say, “Look, you know what? We’re going to allow enterprises to do whatever they want. They can be dictatorial, they can be hierarchical, or they can be distributive.”
Remzi: So, the local community can make their own rules, so to speak, on these things. And that’s the beautiful thing here is because we need experimentation. We want people and communities to experiment with different ways of making decisions. Because, we’re not just using the currency to allocate resources, but decisions, like you just mentioned, of even who should be making, and where, et cetera. These are not easy decisions. They involve a lot of people, but generally speaking, by allowing the locals and on up to make the decisions for themselves, there’s no regional authorities that’ll be coming in in and saying, “You guys, you can’t just let all your enterprises be hierarchical and dictatorial just because that guy, he’s the one who founded it. He wants to make all the decisions, hire and fire people. You can’t let them do that.” Well, yes you can. Because you’re the local community. They can’t tell you what to do.
Jim: I love that.
Remzi: Here’s the beautiful thing about that method though, Jim, is that if the people of that local community are really that dissatisfied with the way that things are running, remember, through the democracy, you either change it or you fucking move.
Jim: Exactly. Vote with your feet, if necessary. I love it. That’s the right answer. Because, one of the things I’m becoming more and more convinced is that we’re talking about a high dimensional design space here and doing exploration in the design space is hugely important. And, anybody comes in with an answer, and says, “This is the answer, mother fucker.” You’re almost certainly wrong. So anyway, I think we’re going to wrap it up here. This has been a good conversation. Do you want to say one more thing?
Remzi: The difference between this democracy that I’m talking about, and what we have today is that, in this one, you’re not trapped. It’s a system that allows for experimentation in change and freedom that you don’t have into the modern society. In modern society, you’re a citizen of a particular state. You’re trapped. Now, the only opportunity you have is to change the way the decisions and the democratic process is done within your country. But, that’s it. You can’t leave. It’s not very easy to leave. You’re not allowed to go someplace else. So, you’re essentially trapped. Whereas, in this system, it’s a massive freedom for the individuals and for the community, because there is no trapping of the community. It’s easy for people to come and go, because you’re not married to any particular location. You are a citizen of the community by choice, not by force. And that’s the difference.
Jim: That’s a good thing. Well, thank you, Remzi. This has been great. I will tell you, I get these kind of new monetary schemes thrown over my transom from time to time. And, most of them I can blow out of the water in about 10 minutes. This one, I think about a little bit. There’s definitely some important ideas here. I would encourage people who want to learn more to get the book. What’s it called? Common planet@common-planet.org. This is actually time well spent reading this book. I enjoyed it. And I thank you for your very important contribution to this field.
Remzi: I appreciate that very much, Jim. Thank you. That was very nice.