Usually, when we talk about Energy Accounting as a hypothetical alternative to capitalism, we are discussing it from an ecological, structural and technical perspective. This is not surprising, by our very roots our movement is concerned with sustainability, and sustainability as a subject is connected to the objective physical reality of the world – a reality which as you know unfortunately doesn’t concern itself with morality or compassion or any human values for that matter.
This does not mean that ethics and fairness are inconsequential. One definition of human societies is that they consist of institutions which are based around systems of ethics, morality and norms. While a few teenage anarchists may want to burn down all norms (because there are entrenched norms which underpin unjust hierarchies and prejudices), a society without norms or without a concept of justice – in short a nihilistic society – would soon enter into a problem when factions would start using force to exert their will.
Ultimately, a society does not only need rules to govern, but to govern well it needs a concept that these rules are fair and ideally would follow a consistent set of beliefs ingraining them into the general interactions of human beings.
One counter-argument against Energy Accounting is that while EA might be possible, it will run counter to – if not human “nature” – then human concepts of fairness. The purpose of this article is to address these concerns and make a case that Energy Accounting as it is conceived by the EOS is a profoundly consistent system of ethics, and that it is more fair – both in terms of the progressive and the conservative understanding of the concept of fairness.
- Energy Accounting is not primarily intended to be a system of property redistribution, but a replacement for money.
- While Energy Accounting removes the concept of exchange, it replaces it with a concept of allocation, taking into account and weighing the contributions of each member of society when determining future income.
- This will produce a certain amount of merit-based compensation.
- Energy Accounting removes the concept of long-term savings, meaning that generational wealth in the form of energy credits cannot be accumulated.
- Fairness in general – both in the conservative and progressive meaning of the concept – means that people should get what they “deserve”. The main difference between the right and the left is that the right ignores unequal starting positions and posits that redistribution will destroy incentives, whereas the left want to create a level playing field to help those disadvantaged by accumulated poverty to advance and hopefully reduce inequality.
- Money in general works to increase inequality by merit of being storable.
- Energy Accounting will reduce inequality and eliminate wealth not derived from needs or labour, by merit of being non-storable.
A moneyless unit of calculation
The Energy Survey defines the total production capacity within the ecological constraints of the planet in terms of exergy, meaning the total amount of available energy within a system. This exergy pool will be divided into shares which will be distributed to the public sector, through key holons and to the individual citizens of the Technate. These shares are divided into units which we refer to as Energy Units or Energy Credits (both terms have their own weaknesses, Energy Units can be confused with actual Units of Energy and make readers believe that they are going to have to carry a battery storing energy around, while Energy Credits sound like it is going to be money with a new fancy name, just like the Hyperloop is just a car tunnel with a new fancy name).
Energy Credits distributed to the public sector represents what the people in common own, while those transferred directly into the hands of the individual citizens represent the share of the global production capacity directly owned by each citizen (excluding property such as valuables, clothing, housing and possibly even land).
There are two essential differences between Energy Credits and money.
First, Energy Credits are created upon transferal to the recipients, being holons or individuals. When used, they are allocated towards the production of goods and services desired by the recipient. During the process of allocation, they are transformed into information, which thereafter are unusable as means of trade. Each Energy Credit is only created to be allocated once, and can thus not wander indefinitely through the economy. The reason why is that they reflect the production capacity of the economy of the Technate.
Total Production Capacity = Total amount of Energy Credits
This of course means that during the course of an accounting cycle, the diminishing amounts of Energy Credits reflect the shrinking ecological budget (or, to use a fancy term – climate budget).
Second, of course, when the accounting cycle is finished, the second Energy Survey has been completed and seamlessly the accounts of every citizen and holon will be cleared and refilled with newly created Energy Credits, reflecting the data of the preceding period.
The unused Energy Credits of the preceding period, however, are deleted, and scrubbed from the system. This means that they neither can be accumulated (through trade) or saved – only used.
Why would anyone work?
We have identified three methods for the Technate of distributing Energy Credits to the citizens.
- A flat basic income which would be granted equally to all citizens. This would guarantee that no citizen would needlessly, against their will, be subject to debilitating homelessness and poverty.
- Energy Credits representing the time and effort put into labour during the preceding period. This method of distribution would ensure that there is an incentive to commit time and effort to work.
- Energy Credits representing the popularity and quality of the services provided by the holons of which the citizens are partaking in. In case the services of the holon are non-authentic or undesired by the citizens, this can be represented by a subtraction of Energy Credits, which would motivate the holon to be dissolved and its participants to move to areas where there is an actual demand.
We would recommend the usage of a combination of these three methods of distribution, though we can see significant room for regional variants and democratic participation.
What binds them together under our form of Energy Accounting is that distribution will occur on basis from data of the preceding period. This would mean that the work hours of for example a baker will yield an increased portfolio of Energy Credits for the succeeding period, and so on.
In short, this will mean that a certain inequality of outcome will arise.
Then, what makes it different from money?
Money and inequality
The invention of money arguably was a stepping stone in the advancement of the human species, as it made trade far easier as a means of standardization (previously, consumer items such as beer and dried cod served as currencies in pre-monetary economies). Money was for all purposes quite useless outside of as being a means of capital, trade and exchange, and moreover it was durable and storable over long courses of time.
The key-word, however, is storable. As money, notwithstanding inflation, can be saved, it is at the same time simultaneously a means of exchange and means of capital. As we today live in a world with soon to be eight billion human beings, most available resources on the planet are owned, and access to them is dependent upon the acquisition of money which then can be utilized for purchasing said access.
This creates a situation characterized by the following two axioms:
- Those without capital savings need to work for someone with capital savings in order to gain access to capital which they then need to pay for housing, clothing and food.
- Those with substantial capital savings can be more picky when choosing what they want to work with, or choose to not work at all.
This situation creates a profound inequality, which also tends to perpetuate itself, because capital is inheritable and can serve to uplift dynasties – especially after the invention of stock markets, which allow those with capital to let their money work for them.
Granted, this system has a proven track record of creating economic growth. A substantial part of humanity today lives in a state of splendour unthinkable even for most middle class and nobility just two hundred years ago. This is far from the case with most of the human race, many of whom are still living as sedentary farmers in the developing world (though cell-phones and Internet access are also affecting the lives of an ever-increasing number of Africans).
However, most of that growth – 80% as a rule – tend to end up in the hands of the 20% wealthiest members of the population. When capital gains grow faster than productivity, the wealth concentration also tend to accelerate. Most of the debate between the proponents of capitalism and socialism during the 19th and 20th centuries have occurred in this dimension and the issue has been about which system is superior in generating growth and also creating fair outcomes.
For the 21st century, the issue will be about a different topic – namely that it is increasingly evident that our current system is overexploiting the planet’s natural reserves and surface, and thus building up the foundations for the largest reduction of social complexity in human history (read; a collapse of gargantuan magnitude).
A fair case for the current system
Cornucopians such as Björn Lomborg, Hans Rosling and Stephen Pinker often point out that while they recognize that inequality is a feature of the current system, it need not be so bad if the economy grows for everyone. In short, an African country which liberalizes and open up its markets will initially feel a shock, but gradually, due to economic growth, people will afford to buy sandals. Their children will then buy bikes. And their grand-children will drive cars on African free-ways. In short, while the monetary system will perpetuate inequality, economic growth (which according to some theorists may even be generated by increased inequality since inequality drives up the incentives for workers to perform and increase their productivity) will lead to a better outcome for everyone in the long run.
Thus, from a utilitarian perspective, inequality may be an acceptable side-effect of economic growth in the long run, if one chooses to disregard the fact that we are living on a planet where we are utilizing the equivalent of what 1,7 Earths can renew in one year!
Thus, the utilitarian argument that eventually, all countries on the planet will catch up with Sweden falls on the fact that if everyone lived as a typical Swede we would need more than 4 Earths for all of humanity. Therefore, what remains are the moral arguments – so lets examine those.
Fairness as a product of labor
Usually, as the conflict is construed in the popular narrative in western societies, the moral conflict between capitalism and socialism is understood as the former believing in legalism – i.e people are entitled to their property rights – whereas the latter believes in social justice – namely that all people should get access to the products and services which the aggregated economy can provide for them.
This view is however only true on the surface level, as both the Right and Left are more closely aligned than either of the two polarities really care to admit. Namely, in regard to the fact that both sides care for fairness as a product of labour.
- The Right, on its side, asserts that every person should be entitled the fruits of their labour, and thence the concept of taxes and redistribution are inherently problematic, as they (according to the proponents of this morality) transfer wealth from the people who created it to people who took no part in its creation. Note that when we talk about the “Right” in this context, we are focusing on market liberals and conservatives, and not proponents of fascist, reactionary or traditionalist ideologies, whose moralities are founded on irrational and subjective principles which are inherently and openly self-serving.
- The Left, on the other hand, claims that capitalism is inherently unfair as the starting field on the marketplace is heavily skewed towards people who possess inherited capital, and that poor people often are brutalized and have less choices in what paths they can pursue, and therefore that some redistribution can make up for the power capital holds over labour in society.
Both sides, in theory, conform to the idea that people are entitled to the fruits of their labour. The conflict lies in whether redistribution or capital inequality constitutes the greater evil.
Therefore, Energy Accounting would solve this conundrum and eliminate this conflict altogether.
Under the model envisioned by the EOS, the distribution of Energy Credits to each citizens is divided into three individual accounts per citizen. The first one is distributed on the basis of a UBI system where each citizen will acquire an equal share of the global economy. The second one is distributed on the basis of the hours of work provided by the citizen, and the third one on the basis of the performance of the holon (cooperative, corporation, branch, department) within which the citizen is working.
This means that there will not be a total equality of outcome under the model which we propose. If you work more during the Period I, you will receive a higher income during Period II, than another citizen who has worked less. Granted, since there is an income floor, the inequality will not create such effects as homelessness or undernourishment. This follows from the third criterion – all human beings should have access to the planet’s livelihood! Meanwhile, the two other citizen accounts will take into account the meritocratic aspects of society.
Is this relative inequality fair, from a leftist or rightist perspective?
If we look from the perspective of work due to labour, both leftists and rightists would have to accept that the Energy Accounting model is fair, as it would guarantee each citizen access to the fruits of their labour, and award Energy Credits according to the amount of time and effort a citizen has committed to necessary tasks.
What Energy Accounting will eliminate, however, will be capital, in the sense of units of wealth which can be exchanged (Energy Credits are transformed into information when allocated and are not units of exchange) and stored (at the beginning of period II, Energy Credits valid for period I are deleted and each account is reset with period II Energy Credits).
This means that aggregated, long-term inequality will be eliminated. Amassing and hoarding wealth over generations will be impossible, and thus the value of one’s labour will diminish over time, meaning that the disparities of income and thus access to resources can more fluidly change between individuals under a system of Energy Accounting. The concept of “old wealth” and “aristocracy” will be completely abolished, not by political decision but by the very design of Energy Credits.
If you believe that fairness is that people should be compensated in accordance with their performance, and that each person is entitled to the fruits of their labour, Energy Accounting should be seen as a system that strives for a fair(er) outcome, as it gives more people the opportunity to participate on a more equal playing field.