A World Without Prices or Profit

[New Randia]

Are prices or profit really necessary?.

oh hell... nevermind.

[Geilinor]

So a Soviet-style economy? According to history, that doesn't work. It stagnates or turns out like North Korea.

Not like a soviet style economy. With pragma-socialism, you can choose which government organizations you give your positive feedback (money) to. Why give your positive feedback to an organization that doesn't deserve it? You wouldn't. Therefore, poorly managed and wasteful government organizations would receive less and less revenue. If they failed to become more productive/efficient...then they would go bankrupt. This would free up resources for more efficient government organizations.

So is "positive feedback" merely a euphemism for "money", but in the context of a state-run economy?

[Xerographica]

How is the free-rider problem relevant? Every organization is a government organization. Every dollar you spend is a tax dollar.

Because those unwilling to pay will garner positive benefits from those willing to pay said organizations while still able to use the provided goods.

If you don't give a dollar to agency A...then you have to give your dollar to agency B. Which one will provide you with the most bang for your buck? That depends on your preference function...which can only be revealed by your willingness to pay.

OK? I fail to see how your system will get rid of opportunity cost, and even how that's particularly relevant to the point at all- your pricing system creates inefficient allocation.

Errr...get rid of opportunity cost? No, resources would be efficiently allocated because consumers would have the freedom to evaluate the alternative uses of their money (positive feedback). This is how we determine the most valuable uses of society's limited resources. Resources would be able to flow to wherever they create the most value because consumers would have the freedom to indicate what they valued most.

[Geilinor]

Because those unwilling to pay will garner positive benefits from those willing to pay said organizations while still able to use the provided goods.

If you don't give a dollar to agency A...then you have to give your dollar to agency B. Which one will provide you with the most bang for your buck? That depends on your preference function...which can only be revealed by your willingness to pay.

OK? I fail to see how your system will get rid of opportunity cost, and even how that's particularly relevant to the point at all- your pricing system creates inefficient allocation.

Errr...get rid of opportunity cost? No, resources would be efficiently allocated because consumers would have the freedom to evaluate the alternative uses of their money (positive feedback). This is how we determine the most valuable uses of society's limited resources. Resources would be able to flow to wherever they create the most value because consumers would have the freedom to indicate what they valued most.

Isn't that how the free market works though? If people value something, they'll buy more of it and be willing to pay more. If people don't want something, they won't buy it and the business will go bankrupt. Supply-and-demand pricing works when it comes to consumer goods.

[Xerographica]

Not like a soviet style economy. With pragma-socialism, you can choose which government organizations you give your positive feedback (money) to. Why give your positive feedback to an organization that doesn't deserve it? You wouldn't. Therefore, poorly managed and wasteful government organizations would receive less and less revenue. If they failed to become more productive/efficient...then they would go bankrupt. This would free up resources for more efficient government organizations.

So is "positive feedback" merely a euphemism for "money", but in the context of a state-run economy?

Money is a type of positive feedback. I like using "positive feedback" because it communicates more about the process.

Yeah, I guess you could call pragma-socialism a state run economy. Then again, a command economy is also a state run economy. So I prefer to use the term "pragma-socialism". There's no profits or prices...but there is money and people can shop for themselves.

[Geilinor]

So is "positive feedback" merely a euphemism for "money", but in the context of a state-run economy?

Money is a type of positive feedback. I like using "positive feedback" because it communicates more about the process.

Yeah, I guess you could call pragma-socialism a state run economy. Then again, a command economy is also a state run economy. So I prefer to use the term "pragma-socialism". There's no profits or prices...but there is money and people can shop for themselves.

What are the benefits of state-owned pragma-socialism as compared to a mixed economy or even democratic socialism with workers having direct ownership?

[Caninope]

Because those unwilling to pay will garner positive benefits from those willing to pay said organizations while still able to use the provided goods.

If you don't give a dollar to agency A...then you have to give your dollar to agency B. Which one will provide you with the most bang for your buck? That depends on your preference function...which can only be revealed by your willingness to pay.

That's actually incorrect. In your hypotheticals regarding both the bakery (private enterprise) and government agencies, you seem to be failing to account for one very important detail. I need not pay. This is particularly true for government agencies in an opt out system, because they are still required by law to provide service to me regardless of whether I've paid or not (at least they are in all of the proposed opt out/opt in systems that I've seen).

OK? I fail to see how your system will get rid of opportunity cost, and even how that's particularly relevant to the point at all- your pricing system creates inefficient allocation.

Errr...get rid of opportunity cost? No, resources would be efficiently allocated because consumers would have the freedom to evaluate the alternative uses of their money (positive feedback). This is how we determine the most valuable uses of society's limited resources. Resources would be able to flow to wherever they create the most value because consumers would have the freedom to indicate what they valued most.

Except that the pricing model is actually the most efficient allocation method. This proposal (of having goods free at the point of delivery and then relying on donations later) is actually a distortion, and creates shortages.

[Parhe]

Or primitive abundance, neither of which being good

How is "superabundance" bad?
I can understand how primitive abundance (like the Neolithic peoples and what have you) is "bad"

It isn't exactly bad, it just likely isn't in existence or, if so, not sustainable for people without some form of tight control.

[Revolutionarily]

a cool place

[Jenrak]

Are prices or profit really necessary? For fun let's try and imagine a world without either. It's hard to imagine a world without profit. It'd be the same as saying imagine a world without economics. Prices, just like profit, are value labels on finite goods for infinite demand. You can't get rid of them. I'm assuming you're just talking about monetary transactions in general, so I'll just go with that.

If you wanted bread, you could go to your local bakery and select the quantity of bread that matched your preferences. You wouldn't have to pay for it...but the employees of the bakery would have the final say on your selection. They would approve or decline your selection when they were scanning your items for inventory purposes. This is quantity. What incentivizes the bakers from making okay bread to terrible bread to good bread? What if the good bakers are running low on good bread? Who gets that good bread? In this case, a scenario such as raising the price would be an indicator of willing purchasers of good bread.

If you were happy with the experience and wanted to give the bakery positive feedback...then you could go to their website and make a contribution of any amount. Their website would display exactly how much positive feedback (revenue) they received. This pidgeonholes the most vocal members of transactions to two people: terrible people and people with a lot of time on their hands. If I purchase twenty different items, do I write reviews for twenty items? If I shop at ten places, do I write reviews for ten places? That sounds like an immense consumption of my time, and I would only do that if I feel I was immensely ripped off or something terrible happened. In other instances, I don't have the time to devote to writing feedback. This also means that you're depending on a subjective scale of productivity. If the Bakery provides the exact same customer service to every customer within a given day, and assuming all of them provide feedback, I will guarantee at least one of them will probably provide negative feedback. Let's say there's several bakeries. How can you trust which bakery to go to if they're very close in terms of quality and you can't figure out what is objectively successful?

When bakeries ordered flour from the same supplier...the supplier would use each bakery's revenue to help determine how to divvy up the flour. What if a bakery is starting up and has no feedback whatsoever? Do they get zero flour? If so, how does the bakery expand? In the real world, we inject a considerable amount of capital into a starting business in the form of a sizable loan. How do we accomplish that in this world? More revenue means more flour. Same thing with the wheat farmer. He would look at how much positive feedback the suppliers had received in order to determine how best to allocate his wheat. Let's say I'm a bakery that supplies a high school. How many high schoolers will I get that will provide positive feedback? How many will be bothered to do so? Let's say I need 600 units of positive feedback to get enough wheat from a farmer to bake enough bread to feed a high school. Let's say I only get 300 reviews. Now what? That means I'll experience a shortage, affecting the quantity demanded, leading to having to compete with substitute goods. That's not good for me. I would have to constantly remind people to fill out feedback so I can keep the supply going, and that has the potential to backfire on me by annoying my customers.

Would you have an incentive to work hard? Let's say that you worked in a bakery. If you failed to work hard...if you did not improve on your recipes...if you wasted your flour...if you took really long lunch breaks...if you were rude to the customers...then your bakery would lose revenue and competing bakeries would gain revenue. This can all be incentivized with what we have right now. If your bakery lost revenue then your boss wouldn't be able to give you as much positive feedback. To what end? As a service worker what can I do with that revenue? If I'm not a direct producer, buyer, and seller of goods (cashier, for instance), how does feedback affect me?

If you received less positive feedback...then you would have less influence over how society's limited resources were used. You wouldn't be able to give your favorite bands...favorite authors...favorite restaurants...as much positive feedback as you felt they deserved. Other than the fact that this sounds a lot like money, how would you define what ranks with what? Are 1-2 good reviews equal to an ice cream cone? Do I just give someone my good review? What if I'm a gigantic asshole as a worker, but a great person otherwise? Does that mean I'm not entitled to the same benefits as everyone else? Plus, your living accommodations and transportation wouldn't be as nice. This sounds incredibly ominous from an ownership perspective. Are you implying that I can lose my car if I have a bad attitude? If my boyfriend cheats on me and I freak out and yell at the top of my lungs during an argument, instead of having the police come to investigate a disturbance, somebody can write bad feedback on me which can then affect my car?

So would it work? No prices...or profit...but you'd still have the freedom to give positive feedback to those who were using society's limited resources for your benefit. And the amount of influence you had would depend on how much positive feedback other people gave you.

Please address my concerns in red.

[Xerographica]

So what I'm getting is that consumers would pay for things with donations.

Yup...kinda.

It's an interesting idea, to say the least.

I agree!

It would be interesting to know how people would use their money in such a situation. The businesses that would survive would be the ones that successfully convince consumers to donate. It'd also be interesting to know how money would be created and destroyed in such a situation. Do loans still function? Do businesses take out a loan and then just "maybe" pay it back if they are satisfied that the bank gave them a good experience and will continue to give them good loans?

I dunno. Why loan? There's a bank that gives money to individuals and organizations. Does the bank want the money back? I dunno. If the bank makes a bunch of crappy loans...then it's doubtful they'll receive much positive feedback (money). Right? But if they consistently make excellent loans...excellent in the sense that they lead to the development of organizations that receive tons of positive feedback (money)...then it seems reasonable that they'll receive quite a bit of positive feedback (money).

How do taxes work? Do the citizens go "Oh well, I guess I liked the government this past year... Guess I'll give them some of my money."?

The tax rate is 100%. All organizations are government organizations. But you can choose where your taxes go.

What does work become all about? Business revenues are highly dependent on the impression made on the consumer. It seems that big businesses are much worse than small businesses at doing that. I mean my barber charges half price for us because he knows my dad well. You wouldn't see that with a big-chain barber shop.

Work will still be about receiving positive feedback (money). Or not. I don't think less people will want to be rock stars.

I have no idea if it would work. Just some questions I thought about.

Good questions! Welcome to the forum!

[Wintersun]

Another thread on pseudo-economics. One that's even more incoherent. If I have to wait in line to get the bread, or wait in the first place, I am paying a price as I could go to another bakery where I could just grab it off the shelf and go. I get that this is supposed to be about communism but even in pure communism that's not how it works at all and under pure communism the incentive to work is the betterment of yourself and others instead of just the betterment of yourself as capitalism is, under capitalism I have no incentive to consume as that does nothing to better myself.

[Shanix]

How do taxes work? Do the citizens go "Oh well, I guess I liked the government this past year... Guess I'll give them some of my money."?

The tax rate is 100%. All organizations are government organizations. But you can choose where your taxes go.

Isn't tax a price on its own?

[Xerographica]

It's hard to imagine a world without profit. It'd be the same as saying imagine a world without economics. Prices, just like profit, are value labels on finite goods for infinite demand. You can't get rid of them. I'm assuming you're just talking about monetary transactions in general, so I'll just go with that.

Actually, money (positive feedback) would still exist...profit and prices not so much.

This is quantity. What incentivizes the bakers from making okay bread to terrible bread to good bread? What if the good bakers are running low on good bread? Who gets that good bread? In this case, a scenario such as raising the price would be an indicator of willing purchasers of good bread.

Positive revenue (money) would incentivize bakers.

What if a bakery is starting up and has no feedback whatsoever? Do they get zero flour? If so, how does the bakery expand? In the real world, we inject a considerable amount of capital into a starting business in the form of a sizable loan. How do we accomplish that in this world?

Yeah, I guess you would still need to get a loan from investors.

This sounds incredibly ominous from an ownership perspective. Are you implying that I can lose my car if I have a bad attitude? If my boyfriend cheats on me and I freak out and yell at the top of my lungs during an argument, instead of having the police come to investigate a disturbance, somebody can write bad feedback on me which can then affect my car?

If you lose your job...then would the organization in charge of housing immediately kick you out of your mansion and stick you in a hovel? Doubtful. Doesn't sound like a good way to get a lot of positive feedback.

[Pandeeria]

No. There has to be some form of incentive to produce supplies. Maybe lessen the importance of currency, but you can't totally trash it. I guess you could live in some horrible world where food and supplies are free, but producing them is compulsory and if you don't then you get shot. That pretty much is the only system right now where no currency would work, and I would rather live in this system then a system where working is compulsory.

[Jello Biafra]

You see, the pricing model (for all its flaws) does at least one thing really well- it allocates resources to those who most value said resources.

No. It merely allocates resources to those who have the ability to pay for them.

[Aequalitia]

Well, I don't think a priceless world can exist in the context of the OP's post. A system based on feedbacks is not stable and can be easy misused.

A priceless world can exist, but not with this system.

[Jenrak]

It's hard to imagine a world without profit. It'd be the same as saying imagine a world without economics. Prices, just like profit, are value labels on finite goods for infinite demand. You can't get rid of them. I'm assuming you're just talking about monetary transactions in general, so I'll just go with that.

Actually, money (positive feedback) would still exist...profit and prices not so much.

My apologies, I think you misinterpreted me. Profit and prices are conceptual in nature; you can't get rid of them. They're built-in relationships. As crudely as I can put it, the price is simply the unit of feedback required to acquire a certain good, whereas the profit is cost and benefit weighing of the transaction. I don't see how they would no longer exist in this new system.

This is quantity. What incentivizes the bakers from making okay bread to terrible bread to good bread? What if the good bakers are running low on good bread? Who gets that good bread? In this case, a scenario such as raising the price would be an indicator of willing purchasers of good bread.

Positive revenue (money) would incentivize bakers.

That still leads to profit. A good baker will sell more than a bad baker because they generate more revenue. Therefore, in a situation where the same amount of resources are allocated, the good baker gains a greater profit. Even if less wheat is supplied because of poorer feedback, there's a delay between making the bread versus supplying for the bread.

What if a bakery is starting up and has no feedback whatsoever? Do they get zero flour? If so, how does the bakery expand? In the real world, we inject a considerable amount of capital into a starting business in the form of a sizable loan. How do we accomplish that in this world?

Yeah, I guess you would still need to get a loan from investors.

This sounds incredibly ominous from an ownership perspective. Are you implying that I can lose my car if I have a bad attitude? If my boyfriend cheats on me and I freak out and yell at the top of my lungs during an argument, instead of having the police come to investigate a disturbance, somebody can write bad feedback on me which can then affect my car?

If you lose your job...then would the organization in charge of housing immediately kick you out of your mansion and stick you in a hovel? Doubtful. Doesn't sound like a good way to get a lot of positive feedback.

Ah, but I'm one person, giving one unit of negative feedback. How would I be able to command enough purchasing power to convince an organization when I can only command one unit of whatever the currency is? Additionally, if I'm a minority, and a small town is virulently xenophobic, how does this system account for something like that? What if a racist shop opens up and gets a ton of great reviews because everybody else doesn't see a problem with it, except for the one minority? Is that person stuck commanding only one unit (feedback)?

[Xerographica]

Money is a type of positive feedback. I like using "positive feedback" because it communicates more about the process.

Yeah, I guess you could call pragma-socialism a state run economy. Then again, a command economy is also a state run economy. So I prefer to use the term "pragma-socialism". There's no profits or prices...but there is money and people can shop for themselves.

What are the benefits of state-owned pragma-socialism as compared to a mixed economy or even democratic socialism with workers having direct ownership?

The problem with the current public sector is that you can't give specific government organizations positive feedback. Once that problem is corrected...then what should the tax rate be?

Congress determines the tax rate...and you would be able to give congress positive feedback (money). The closer congress got to the optimal tax rate...the more revenue it would receive.

But how high could the tax rate go? Are there certain goods that could never be public goods? I dunno...that's the point of this thread.

[Latinorium]

Sounds like a good idea until you start to think about it. If you can just get things why would anybody want to do jobs like garbage collection or waiter?

[Xerographica]

My apologies, I think you misinterpreted me. Profit and prices are conceptual in nature; you can't get rid of them. They're built-in relationships. As crudely as I can put it, the price is simply the unit of feedback required to acquire a certain good, whereas the profit is cost and benefit weighing of the transaction. I don't see how they would no longer exist in this new system.

You walk into a bakery...and low and behold...there aren't any price tags on any of the baked goods. But if you're happy with the baked goods...then you can give the bakery some of your positive feedback (money). Except, a dollar that you give to the bakery is a dollar that you can't give to your favorite video game organization. This is the opportunity cost concept. It's how we would ensure the optimal amount of video games and bread.

That still leads to profit. A good baker will sell more than a bad baker because they generate more revenue. Therefore, in a situation where the same amount of resources are allocated, the good baker gains a greater profit. Even if less wheat is supplied because of poorer feedback, there's a delay between making the bread versus supplying for the bread.

Hmmm...I don't think revenue and profit are the same thing. But the point is that the better baker will receive more revenue and have more influence over how society's limited resources are used. Unless his competitors start providing more value for consumers.

Ah, but I'm one person, giving one unit of negative feedback. How would I be able to command enough purchasing power to convince an organization when I can only command one unit of whatever the currency is? Additionally, if I'm a minority, and a small town is virulently xenophobic, how does this system account for something like that? What if a racist shop opens up and gets a ton of great reviews because everybody else doesn't see a problem with it, except for the one minority? Is that person stuck commanding only one unit (feedback)?

How can you give a unit of negative feedback?

If a racist shop opens...and makes a ton of revenue...then how many minorities are getting screwed? A lot? If so, then just start your own business and hire everybody and don't limit your customers by race. Then you'll receive more positive feedback than your competitor.

[Xerographica]

Sounds like a good idea until you start to think about it. If you can just get things why would anybody want to do jobs like garbage collection or waiter?

Because people would want money (positive feedback).

[Xerographica]

Except that the pricing model is actually the most efficient allocation method. This proposal (of having goods free at the point of delivery and then relying on donations later) is actually a distortion, and creates shortages.

Again, I don't understand why you believe that shortages would be created. I go to the bakery and get bread. The fact that I can get bread means that there isn't a shortage of bread. But because I feel like the bakery has enough revenue...I give my positive feedback (money) to my favorite video game organization. Why? Because I feel like they don't have enough revenue. In other words, I feel like there's enough bread but not enough video games.

But what does "enough" bread and "not enough" video games even mean? These are purely subjective concepts. "Enough" bread to an Italian isn't the same thing as "enough" bread to a Chinese. "Enough" video games to a 13 year old kid isn't the same thing as "enough" video games to a 99 year old great grandpa.

Given that each person's preference function is unique...the only way to determine the optimal supply of bread, video games and a gazillion other products/services is to allow each and every person to decide for themselves which goods/services they want more of. If they spend their money on it then they want more of it.

With this in mind, it's logically impossible for "important" organizations to be underfunded. That's simply because "importance" can only be measured by how much that we, as a society, are willing to sacrifice for something. If bread is truly important to society, then the amount of revenue that bakeries receive will reflect this. If not, then maybe rice is more important to society. Maybe pasta is more important to society. Maybe cancer research is more important to society.

And if you want bread to be more important to society, then sacrifice your time/money trying to help people understand why it should be a more important priority for them.

[Xerographica]

No. There has to be some form of incentive to produce supplies. Maybe lessen the importance of currency, but you can't totally trash it. I guess you could live in some horrible world where food and supplies are free, but producing them is compulsory and if you don't then you get shot. That pretty much is the only system right now where no currency would work, and I would rather live in this system then a system where working is compulsory.

Sorry, I should have made it clearer in my original post that money would still exist.

[Caninope]

Except that the pricing model is actually the most efficient allocation method. This proposal (of having goods free at the point of delivery and then relying on donations later) is actually a distortion, and creates shortages.

Again, I don't understand why you believe that shortages would be created.

Because you're making participation in the pricing system optional. This would increase the demand for bread (as people are more willing to take something free than something that costs money as per the law of demand) while decreasing the supply of bread (as people are less willing to make bread when they are not guaranteed adequate payment for their services, particularly as humans tend to be risk-averse).

I go to the bakery and get bread. The fact that I can get bread means that there isn't a shortage of bread.

But why do you make the assumption that there will be an abundance of bread and not a shortage?

But because I feel like the bakery has enough revenue...I give my positive feedback (money) to my favorite video game organization. Why? Because I feel like they don't have enough revenue. In other words, I feel like there's enough bread but not enough video games.

And what if someone chooses to use both services but pay for neither?

But what does "enough" bread and "not enough" video games even mean? These are purely subjective concepts. "Enough" bread to an Italian isn't the same thing as "enough" bread to a Chinese. "Enough" video games to a 13 year old kid isn't the same thing as "enough" video games to a 99 year old great grandpa.

Given that each person's preference function is unique...the only way to determine the optimal supply of bread, video games and a gazillion other products/services is to allow each and every person to decide for themselves which goods/services they want more of. If they spend their money on it then they want more of it.

Exactly. However, getting rid of the pricing model moves people along to different points on those preference functions. While this is most certainly not a problem in a system in which everyone participates in a pricing model, in your alternative model, people are allowed to use services without payment for their use. Hence, there are shortages. Your system does not deal with the issue of scarcity. Your system would only work in a system of overabundance, where there would be a certain minimum standard that could be met for everyone at a minimum cost. This is, however, a fantasy world.

With this in mind, it's logically impossible for "important" organizations to be underfunded. That's simply because "importance" can only be measured by how much that we, as a society, are willing to sacrifice for something. If bread is truly important to society, then the amount of revenue that bakeries receive will reflect this. If not, then maybe rice is more important to society. Maybe pasta is more important to society. Maybe cancer research is more important to society.

And if you want bread to be more important to society, then sacrifice your time/money trying to help people understand why it should be a more important priority for them.

The problem with that line of logic is that people have a tendency to favor immediate and tangible gains (particularly with vague and long term costs) than the inverse, and this is only amplified when it does not apply to one particular person.

Let's take unemployment insurance as an example. It has beneficial effects, but allowing people to choose whether their tax money will be spent going to UI or not would result in quite a number of them choosing to defund the program. You're equating importance to society with popularity in society while I'm equating it with the consequences upon society.