The initial business model of Socibuild will be to hand out free 2-year leases to attract high-value communities. These resulting high-value communities will then cover the opportunity cost for Socibuild of not charging rent for the first 2 years by appreciating the value of the Real Estate it owns. However, in the long run, we want to develop a model that pays out a “Resident’s Dividend”, in the form of housing tokens issued by Socibuild, which residents can use to pay their rent. We hope that our residents will start to use housing tokens to trade for other goods and services so that the Resident’s Dividend will evolve into a general claim on capital that all residents in our communities universally possess.
Socibuild also intends to make low-interest housing token loans out to residents. This will provide all of our residents with plentiful access to capital. This will address all concerns that relate to unemployment, technological or otherwise, as explained below:
Concerns Over Technological Unemployment And Precariousness
There is currently a great deal of concern that, in the near future, workers will be replaced by machines. This is already happening extensively in many industries today, and although aggregate employment levels currently remain high (at least prior to COVID-19), mid-skilled jobs with medium pay are being replaced mostly by insecure, low-skilled jobs with very low pay (combined with a slight increase in highly-skilled, highly-paid jobs) – this trend seems set to persist into the future.
But although technological mass-unemployment has not yet materialized, technology has already profoundly altered the job market – and not for the better. The same internet that makes forming new relationships, with new people, much easier, also makes it easier to sever and replace existing relationships. This has destabilized our social environment. There is less incentive to work out minor relationship issues with your existing romantic partner if after ditching him/her you can rapidly expect, or hope, to find a new – and possibly better – partner. There is also less reason for managers to expend time and energy talking to, and coaching, employees who have produced disappointing work – as opposed to just firing them – if there is a competitive, affordable market of contractors available to perform the tasks which their sub-optimal employee was performing at a mediocre level.
This creates an intensely competitive market where competing contractors struggle to maintain competitive CVs and where career gaps, gaffes, and slip-ups become ever more difficult to claw back from.
Potential employees are increasingly expected to take on the financial risk of training and up-skilling themselves – in ways that often require getting into substantial debt. On-the-job-training and paid-apprenticeships are being replaced by unpaid internships and training courses that charge fees, where the general rule is “buyer beware”. If you pay £10,000 to take a 2-year course which doesn’t provide you with any commercially relevant skills – tough luck!
What Is Employment?
If we are to take the view that employment is a social good, the most sensible way to conceive of employment, at a fundamental level, is:
The opportunity to occupy your time with some productive activity that is both meaningful and provides you with a living.
To be human is to act. Furthermore, while we are strongly motivated to help others, we are also self-interested. We want to enjoy a decent quality of life and we want our activities to secure a better life for ourselves and for those we love. Perhaps, the main purpose of the brain is to distinguish between beneficial activities, useless activities and positively harmful activities and to coordinate our activities to ensure that they are beneficial. When we believe that our activities are beneficial, we engage with them and experience a sense of satisfaction. When we believe our activities are useless, we become disengaged, bored and – eventually – depressed and frustrated. This is the core reason why it is so important that people should have a productive outlet for their time and energy. Charitable work that pays nothing is easy to come by, can be useful to others and, as such, can be emotionally rewarding. Nevertheless, if someone who volunteers to do unpaid work for a charity doesn’t have a job, and finds themselves struggling to pay rent, buy food and cover even the most basic utility bills – they can still end up feeling demoralized and unappreciated.
At a very basic physical level, our actions can only rearrange what already exists into new configurations that ideally have higher value. Those raw materials can be minerals, plants, components, tools, ideas, words, inspiration, laws, social mores, etc., Without something to work with, it is difficult to produce anything of value at all.
Broadly speaking, we can think of “capital” as anything which enhances our ability to produce value with our labour for ourselves and others. Here are some examples of different kinds of capital:
- Natural capital (land, fertile soil, wild fish stocks, timber, mineral seams)
- Tools and components (labour imprinted onto matter that makes further labour easier)
- Intellectual capital (Books, patents, copyright, computer code etc.,)
- Social Capital (Brands, followings, trust that makes trading with strangers easier)
- Organizational Capital (the interrelationships between many specialists, within an organization, that facilitates productivity and is often difficult to replicate)
- Locational Capital (Certain locations – such as red-light districts or shopping centres – become places where buyers and sellers congregate together to trade a particular, or many, things. Sellers go there for the high density of buyers, buyers go there for the high density of sellers)
Broadly speaking, we can think of productivity in the following way:
Productivity = f(labour) X f(capital)
Where both f(labour) and f(capital) are usually subject to diminishing marginal returns.
Access to capital increases productivity. Consider the task of cutting a lawn. If all you have is scissors, you won’t cut much grass with your time. If you get a pair of shears, you will be able to cut much more grass per unit time and your labour will be more productive, a lawnmower will enable you to cut yet more grass per unit labour, a tractor mower, more still. At some point, it’s not worth spending more money on being able to cut the grass faster and you begin to hit a point of diminishing marginal returns. The same applies to labour: the more time you spent working on something, the more you get done. Until that is, you start to get tired and make mistakes, at which stage, you have reached the point of diminishing marginal returns.
An individual who lacks their own capital can be still productive by using the capital of others. When viewed in this context, employment can be thought of as when an owner of capital makes the use of their capital (tools, effective organization, a busy shop front, brand recognition, etc.,) available to labourers who then use it to provide value of some kind for customers in exchange for keeping a portion of the income that customers pay the team of labourers for the end service they provide. The “weekly wage” can be thought of as an insurance service which capital owners provide their workers to protect them from loss-making lean weeks in exchange for taking higher profit-margins when business is good. Over the long term though, no employer can pay their workers more money than they bring in from customers and hope to stay in business. So employment is, at its most basic level, the renting out of capital to labourers in a manner that enhances the wage-earning capacity of the labourers while also profiting the employer.
The particular tools, ideas, organizations and brands a person may require to produce something of value hugely depends on the particular kind of value (usually a good or service) which said person aims to produce. However, in a market economy, it is usually possible to procure all manner of tools, patents, services, licenses, rights, etc., through the payment of money. So, while money itself may not be capital, it does represent a claim on capital at the most general level. And someone with a task he or she wishes to complete – either for his or her own benefit – or perhaps for the benefit of a customer can usually find some way to accomplish that task with less time and effort by spending some money, whether to purchase labour-saving devices, labour-saving software or to sub-contract some, or all, of the tasks required to appropriate specialists.
In general, something acquires a price whenever the demand for it exceeds its supply at zero price. In principle, certain natural resources, like air, for which supply exceeds demand are free. Human labour always has a price as if demand falls, supply will also fall to maintain the price at which people are willing to work for others (people won’t work for nothing). Some kinds of readily accessible legacy man-made information is also free. People can use their labour to create value out of plentiful resources. However, certain resources are more productive than others (particularly dense forests, rich farmland, busy streets, appealing brands), and any scarce capital resources that allow people to produce more value per unit time will generally be in demand and, as such, will acquire a price that must be paid in order to access them.
People are willing to pay for favourable inputs that increase the productivity of their labour, as much as they are willing to pay money for desirable outputs.
Thus, labour can best be viewed as a capital multiplier, or a value multiplier. Inputs of zero value will generally produce outputs of very low value – even after a great deal of effort has been expended on them. The tendency of labour to multiply existing value, over and over again, is the origin of the exponential capital growth and also the reason for the term “seed capital” in reference to starting new businesses – as few entrepreneurs, with absolutely nothing, can produce value unless investors provide them with some initial seed.
With money, we can accomplish more with our time. With money we can be more productive.
Recalling our initial definition of employment as “The opportunity to occupy your time with some productive activity” it should now be clear that:
Access to capital = Access to productive outlets for your activity
Thus a Resident’s Dividend can boost productivity by increasing people’s access to capital and, indeed, by giving everyone access to capital, a resident’s dividend will – by definition – give all residents a productive outlet for their activities. This is equivalent to full employment, or at least universal access to capital produces all the equivalent benefits which full employment would produce.
Self-Provision : An Endless Outlet For Productive Activity
One of the greatest risks that any businessmen, or indeed employee, faces is that no one out there will demand their goods or services at the price they need to produce them and earn a living.
In this respect, the activity of self-provision has considerable advantages, in that you can never get fired from providing for yourself. If you are both your own customer and your own boss, then your job is secure.
In today’s highly specialized society, we think of productivity as any activity that someone else will pay us money to engage in, money which we can then use, in turn, to purchase goods and services which meet our various needs and wants. But, historically, societies dominated by professional employment in exchange for money are the exception rather than the rule. For the majority of history, families of peasants built their own houses, grew their own crops and, for the most part, worked to supply their own needs off the land. A fraction of the crops would be paid as taxes to the landlord, who might sell it for gold coins. A peasant might occasionally go to town to sell some surplus crops, tools or other works of craftsmanship in town to purchase farm tools, or perhaps salt or other seasonings, but the bulk of most people’s labour for most of history was devoted to providing for their own needs with the sale of agricultural surplus serving as the icing on the cake. Full-time professional classes, who worked mostly for money, accounted for perhaps 10% of the overall population during, and before, most of the pre-industrial period.
The same applies for hunter-gatherers.
While subsistence farmers and hunter-gatherers, who composed the bulk of humanity for most of history, undoubtedly both managed to live lives which they would consider to be meaningful and satisfying, by our standards they lacked many of the comforts that we today are accustomed to. There is no doubt that trade and specialization both give rise to a more productive economy.
But now, instead of considering a life of raw self-provision, let us consider a life of self-provision from a base that is capitalized by the unconditional receipt of money in the form of a basic income. Instead of considering building a shelter and cultivating a garden using nothing more than what can be found in nature, consider, instead, building a shelter and cultivating a garden using carefully selected tools and raw materials, purchased from the market economy, that are chosen to provide the self-provider with the maximum benefit at a minimal cost.
Instead of buying a house, what if our self-provider buys raw materials such as bricks, mortar paint and pipes and applies his labour to these materials to construct a house (possibly bringing in a certified electrician to wire the electrics)? What if our self-provider, purchases gardening tools, fertilizer and equipment to maximize the productivity of his efforts in growing and storing food to feed himself? What if our self-provider limits himself to rearing animals and growing fresh vegetables that quickly go off while using a portion of his resident’s income to purchase dry energy foods that are easily stored (like flour and rice)? What if our self-provider purchases a velo-mobile that can be powered both by pedal power or an electric motor to affordably cover his transport needs?
Under such circumstances, could it not be said that a modest, time-averaged basic income, if appropriately mixed with labour, might afford someone a very acceptable quality of life?
An essential part of ensuring that a modest basic income can secure someone a high quality of life is to combine it with an issuance of credit at low-interest in order to front-load much of the income as an initial capital loan. £5,000 a year, for example, would initially seem like a sum that could only afford someone a meagre existence, but at 2.5% interest, £5,000 a year could service a £200,000 loan which, if combined with careful planning and industrious activity, could secure the setting up and construction of a homestead in the countryside filled with ample comforts and amenities to facilitate a quality of life that was acceptably high by most people’s standards.
Clearly it is possible that, by working industriously on capital purchased by a loan that is serviced by an unconditional income, one could provide a decent quality of life for one’s self. But what about unresourceful people who might waste their money and make foolish purchases? The answer is, that while it will initially take a great deal of effort, on the part of resourceful pioneers, to find the optimal set of things to purchase with a self-provision loan, the optimal skills to develop and the optimal means of using one’s time to provide a high quality of life for oneself, living in one’s own homestead, once the initial wave of pioneers find the best “recipe” for using one’s time and finite capital for creating the best quality of life for one’s self, that recipe can be taught to a far larger audience and secure a high quality of life for practically everyone, in the process promoting universal prosperity and full employment.
Furthermore, there is a critical difference between vocational training and self-sufficiency training as a means of lifting people out of poverty and securing better lives for them. A lot of vocational training, trains people with specific skill sets to working in specific industries that may become obsolete or for which demand may decline. Uniquely as an economic activity, the demand for self-provision never declines as the supplier of labour and the demander of labour are the same person. Therefore, unlike other professional niches in which demand can saturate, the demand for self-provision will never saturate and self-provision will always be able to fully absorb the entire unemployed workforce no matter how large!
Self-provision is also resistant to technological change. Often it can seem that adapting to new technology is not optional – but mandatory. This is because customers tend to switch to products and services which provide better value so, as competing suppliers embrace technologies that provide better value to customers, the companies that fail to adapt go bust. This process is good from the point of view of the customer, but from the supply side the results can be disastrous: people who have devoted their lives to building a business, or developing their career, can suddenly find themselves irrelevant and incapable of earning, even the most basic, living.
Self-provision is different because self-providers don’t compete with each other. If new technology emerges that offers self-providers who embrace it a slightly higher quality of life than those that don’t, the self-providers that stick to their old ways won’t go bankrupt, rather they’ll just keep chugging along and continue to live their slightly lower quality of life. Thus, by promoting self-provision as an activity, we could potentially bring an end to the mandatory changes that new technology force upon those who wish to stay relevant in the workforce and instead embrace technologies at our own preferred pace.
Most importantly, self-provision will remain a viable activity even after ALL the other tasks performed by our economy become fully automated.
As for those who lack self-discipline and would be better off in a structured work environment than setting up a homestead to provide for themselves, the banks who offer out the self-sufficiency loans could provide that discipline by setting a self-provision plan and time table, making the loan conditional on taking – and passing – a course for developing critical self-provision skills, then releasing the loan’s capital in instalments, and only releasing the next instalment once the self-provider met certain milestones.
Alternatively, banks could simply refuse to loan money to individuals that are truly unsuited for setting up and managing their own homestead. However, the activity of self-provision will give rise to a vacuum in the workforce that will suck up those unsuited to setting up a homestead – and, as a result, (close to) the entire population will be gainfully employed.
In addition to securing gainful employment for all, self-provision will also maintain wages at a stable and high level, as Henry George eloquently articulated in his “Law of Wages”:
“…what, in the condition of freedom, will be the terms at which one man can hire others to work for him? Evidently, they will be fixed by what the men could make if labouring for themselves [on free land]. The principle which will prevent him from having to give anything above this, except what is necessary to induce the change, will also prevent them from taking anything less. Did they demand more, the competition from others would prevent them from getting employment. Did he offer less, none would accept the terms, as they could obtain greater results by working for themselves.”
So while Basic Income, as a stand-alone policy, is not a panacea to all our problems, the combination of:
- A Modest Unconditional Income
- Low Interest, readily available self-provision loans
- Self-Provision training
IS A COMPLETE PANACEA to nearly ALL the problems which beset our economy. And could practically ELIMINATE poverty ONCE AND FOR ALL!!!
Furthermore, by eliminating poverty, these policies could also eliminate (or at least reduce) societies unquenchable thirst for economic growth and the hasty race to develop ever more powerful versions of AI which could – in the not too distant future – become powerful enough to threaten the very existence of humanity.
Socibuild Intends To…
- Pay all of our residents a resident’s income
- Offer self-provision loans (along with other loans) denominated in housing tokens
- Promote knowledge sharing and education
Therefore its communities will serve as a microcosm to model the solution to poverty and unemployment everywhere and will either serve as an example for governments to model, or Socibuild will simply expand extremely rapidly as a company so that everyone, everywhere has the option to exist inside Socibuild’s economic model – therefore ending unemployment and poverty everywhere and building a better society for everyone.