Socialist Tokens: There would be no taxes under socialism
For this interview I spoke to Dr. Phillipp Dapprich, a post doc at the University of Potsdam in political theory who did his doctors thesis on socialist central planning studying under Paul Cockshott. He recently published a paper titled Tokens make the world go round: socialist tokens as an alternative to money. During the interview we spoke about why socialists are interested in economic planning, his proposal for using non-exchanging socialist tokens to facilitate a socialist economy for ...
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Alright. Hello, everyone. You're listening to the Blockchain Socialist Podcast. And for today's interview, I have doctor Philip Daprich. He is a postdoc at the University of Potsdam in political theory, and he did his doctor's thesis on socialist central planning studying under Paul Cockshott. And the reason I wanted to reach out to him is because he wrote a very interesting article titled Tokens Make the World Go Round, Socialist Tokens as an Alternative to Money. So hey, Philip. How are you doing? Hey. Great to be here. Thanks for inviting me. Yeah. This is like the first time I've ever, I think, spoken to another socialist about tokens that wasn't related to crypto. So I'm really excited to talk about this because I, like, I've been thinking a lot about the idea of tokens and kind of like, yeah, the way that we kind of sometimes restrict what we think about tokens as purely kind of like a financial thing or just like as a euphemism for money or like a euphemism for, like, I don't know, arcade tokens or like casino chips or things like that. But I think there are some, like, really interesting ways to think about this word and to think about its implementation. And I think, your paper, thinking about tokens as a way to plan a socialist economy was, really, really interesting. So maybe as a start, would you want to give a quick introduction, maybe to yourself and to, kind of what you were trying to accomplish with the paper?
Right. So I wrote my PhD thesis on, socialist planning, and a big part of what I was interested in was, distributive justice and, how in a socialist economy, consumer products in particular should be distributed. And in the nineteenth century, there was sort of this quite widespread idea of using some kind of tokens or vouchers, to do that. Marx also discusses this in in, his article, the Critique of the Go to program, where he discusses another proposal, the so called Go to program, which has that, but he, has some points of criticism of that, but he still maintains, at least for a lower stage of communism, this this idea of this idea of tokens with some, sort of changes to that from from from the go to program. And the ideas, the the idea is, is is to have a mechanism for distributing consumer products. And because I was interested in my thesis in in distributive justice and how consumer products should be distributed, I decided to take that idea, from the nineteenth century and, you know, put some put some changes on it and and try to see if it if it still makes sense today.
Is this the same,
is this kinda like labor vouchers that Marx talks about at this point? Yeah. So so Marx uses labor vouchers or or or still uses labor vouchers. So the idea is that, these vouchers are paid out to people in proportion to the labor time that they contribute to socialized production. And then, the prices of products are also measured in labor time. So the token prices are measured in labor time, the labor time that's necessary to produce them. And that somewhat changes in in my proposal, and, yeah, I'm really following on, Paul Cockshott, who was my supervisor, and Alan Cottrell, who was his coauthor for their book Towards a New Socialism in the nineteen nineties. And they took over this idea from market socialists, which was to actually you know, let let's not have fixed prices, which just correspond to to the labor time of products, but let's instead, adopt these prices and regulate them towards what's called market clearing prices or market clearing rates. And these are simply the prices at which supply and demand demand for a product will match. Right? Yeah. And, so so that's something I, I adopt as well, and, and there are several reasons I I give for that. I think, you know, maybe one of the important ones is people often associate with real existing socialism, that there were always shortages for consumer products. Right? You went into a war and do into a shop, and, all the shelves would be empty or something like that. Right? And a big reason for that was not necessarily that they didn't produce enough of these things. The reason was that the prices were kept artificially low, and people could afford a lot more of these than were available. So, the first people in the shop would just, you know, buy everything, and then they wouldn't at the end of the day, there wouldn't be anything left. So if you came You think there there were shortages there were shortages because people were eating? Yes. Pretty much. But but, obviously, it it it leads to a lot of problems because then, you know, some people might be, but might be getting all of this. What I what I argue is that in a sentence, this means the tokens lose their purpose because whether or not you have the tokens to buy an item is no longer relevant as to whether or not you're gonna get it. Right? It just matters whether you're gonna be first there. Or, actually, this was also a gateway for a lot of corruption. So, you know, the butcher might have some control over who then actually gets the meat, and then he might do some trade with with the baker. Right? And the baker will with the butcher somewhere. Right? So this is, like, a form of corruption, which is enabled because the prices were kept artificially low. And, yeah, having having market clearing rates just ensures that anyone who is actually willing to, you know, use their tokens for a loaf of bread can also do that. And, and this means that, you know, tokens actually have the function of, of deciding who, who gets how much of various products.
Right. So this is so yeah, this is around the idea of when you say distributed, distributive justice, you're talking about, the distribution of resources that, I guess, from a certain political standpoint we would say should be like equally, equally granted or like equitably granted to people in a society rather than sort of dictating it through, who has power over this and that, jurisdiction or like these many, say, abuses of power that is involved that can be under capitalism through markets, through capital, or through other means? Yeah. I mean, in in general, distributive justice means,
it it ask ask how resources or, or, you know, economic wealth, should be distributed from sort of a moral normative point of view. Right? And there's a debate about, you know, what is it that that, that should be distributed in this way. Right? One point of view is resources should be distributed. Other people think it's welfare. But what I'm focusing on is solely consumer products, and the reason is because I'm interested in socialist society. And in a socialist society, the means of production are publicly owned. Right? So the only question that remains in the socialist society is how do you distribute, how do you then distribute the consumer products, the end products to individual consumers? Because, you know, even if the means of production are publicly owned, in the end, you know, there will be individuals eating yogurts, loads of bread, using laptops and so on. Right? And we There will still be yogurts in socialist There will be, hopefully. Yes. Socialist utopia. Yeah. And and that raises the question as well, who gets how many of those? Right.
Right. So this is the whole so like the the history of kind of like this idea also is linked to the history of, you know, these debates between socialists and and liberals or libertarians or or capitalists, whatever you want to call them, around the idea of economically of economic planning and whether that is something that is possible and whether that is something that can only be handled through like the invisible hand of the market or whatever. So maybe could you explain a bit for those who are not aware, like, why are socialists interested in economic planning? Is it because we just want to control the world as, like, some sort of globalist elite, dictators or is it for something, for something else?
Well, I mean, any economic system involves a degree of economic planning. And, actually, in in in the debates, like, some of the socialist calculation debate about the feasibility of socialist planning, both sides agree on this. Right? Everyone agrees there's even in sort of capitalist market economies, there's economic planning. But economic planning tends to be, and and market capitalism tends to be, focused on planning within an individual firm. A firm will have a business plan. They will decide, you know, what are they going to produce in the in the next year. And socialists have long claimed, and I I still think there's some truth to this, that that this leads to sort of a lack of coordination in the economy as a whole. Right? Friedrich Engels, talked about, the sort of, you know, strict planning of production within an individual firm and then the anarchy of the market, of of the wider market, right, of the economy as a whole. And then the socialist proposal was, you know, okay. Let's take these concepts of planning from from within firms and extend that to the to the economy as a whole to achieve greater coordination. Right? And then, you know, a lot of these debates are about whether, you know, doesn't the market actually already achieve, this kind of coordination, and, could we even mimic, the same results or achieve even better results than the market does in coordinating activity of various economic actors? And that's also debate I'm I'm very much involved in at the moment.
I love that you said for coordinating, like, as like, thinking of firms as, like, islands of coordination within, like, an ocean of of anarchy, I guess you could say. I think that's super I don't know if you you may not be aware, but, like, in the crypto world, this idea of coordination is really, really big. It's like a huge meme that, you know, people like, these memes of, like, you know, the the astronauts pointing pointing the gun or something behind the other astronaut looking at the Earth. And it's like, was it always coordination? And the guy's like, it's always it's always been coordination. Or is it all coordination? It's always been coordination. Yeah. But they're taking it from a very, well, I guess not not a socialist point of view for sure. They're not or they're not that analysis isn't necessarily coming in, but the idea of coordination and, like, the fact that we are very discoordinated or we are not coordinating much at all to solve sort of global issues is, like, this big ongoing theme that's been going on in crypto world that I think, is really interesting. It's really interesting that you said that. And I guess, like, our kind of critique would be that, this lack of coordination is just heavily linked to the way that capitalism is just sort of run. Like that's just how it works. There is this need for a lack of coordination amongst the masses while there is, you know, coordination within these little islands of of kinda like corporate kingdoms, I guess, is kind of how I think about it.
Yes. So Friedrich Hayek argued argued that, you know, the market price mechanism takes over a lot of this coordination because prices, signal certain information. Right? But there's also a lot of information which doesn't get signaled by that. So for example, one firm will not know how much another firm is gonna be producing next year. And I think you can you can show game theoretically, actually, that a lot of the times, firms don't have an interest in sharing this this kind of information with their competitors. They want to, keep something secret or rather they might want to signal actually things which are not necessarily true. And that can lead to, you know, miscoordination or or, like, you know, the business plans of of one firm doesn't not making sense, in the light of of of other people's firms. And then you might have things like overproduction because now suddenly everyone is producing too much or too little of something, right, because they didn't coordinate with with each other. And I think that's certainly one thing that sort of this economy wide planning, could address, a lot better than the market does. Yeah.
Yeah. So a I kind of see it as, like, the the profit motive or, like, the need to accumulate capital is sort of, like, the incentive mechanism for different corporations to not, like, coordinate with one another in terms of their, like, what they're going to produce, like, what they're what they're planning to make within the next year, what kind of supplies do they have to sort of come to an efficient use of those resources. Instead, it's just sort of like, well, if I do it this way, I can make a shit ton of money at your expense, and I don't care because I need to make money. I need to accumulate capital because those are the incentives of the market. Yeah. Of course. And in the end, it comes down to the fact that capitalist firms want to, you know, maximize their own profit and necessarily social welfare. Yeah.
An an example for that would be, you know, let's let's say there's, like, a certain level, a certain amount of of, steel or some some other product that is needed in in society. Right? And one steel firm could now signal, oh, we're going to be producing, like, the vast majority or we're gonna be producing 60,000 tons or whatever of steel. Right? Maybe way more than they actually will produce. Right? But they could signal that to deter their competitors from producing because they're gonna think, like, no. There's gonna be, like, too much if they produce all of this. The price is gonna be low. It's not gonna be worth it for us. Right? But then their first statement might have been a lie, and, actually, you know, they're going to be producing a lot less. They just signaled they were going to produce more to deter others from investing in the sector, which keeps the price of steel up because, actually, in the end, you're not gonna have as much steel as it's needed.
Right. Or that could just be an intentional lie to keep steel prices up anyways, you know, for the entire industry or, like, you know, to change to change sort of expectations. Sure. Yeah. Yeah. But primarily, you know, to keep competitors out and, keep them from producing,
as much, right, as as as might be needed simply so that you can you can profit off the higher steel prices. Yeah. And so the sort of like one of the
first, I guess, socialist, attempts at trying to solve this problem about coordination or an alternative to, like, capitalism, that Marx proposed was labor vouchers. I know that, you know, the proposal that you're making in your paper is different than labor vouchers, but do you wanna explain a bit just what labor vouchers are? As far as I understand, it's just pricing everything and kind of like work labor hours or something like that. Like this is this is a two hour coin and it took, you know, two hours to make this thing. So that's how you make kind of the exchange on this idea of like kind of the labor theory of value.
Yeah. So I mean the the labor vouchers are not necessarily a proposal for for planning of production. Right? They are proposal for them distributing the the consumer products out of socialized production to individual consumers. Interestingly, Marx and also his close comrade, Friedrich Engels, didn't say much about how they actually thought this planning would take place, which, I think is a huge omission. And, at times, it seemed like they thought it was, you know, quite simple. Oh, you just you just plan. That it's really easy. Because it's not of course, it's really not that easy. Certainly, you know, today Just do the math. Yeah. Certainly, today, when you have, like, you know, millions of different products and and ways of producing them. So, I think they might have been a bit naive about that. But this the the tokens are nonetheless interesting, first of all, because you do need the mechanism for distributing consumer products to individuals once you have produced whatever you're going to be to be producing, and secondly, because they are, like, the closest or they are, like, the most concrete that that Marx gets about, you know, what a socialist society would actually be organized like. Yeah. And so these these tokens, or labor vouchers, they are given out to con to to workers, for the work, that they've done, and they would actually be denominated in time in in the time that they've done. Right? So, the original proposal in the GoTo program that Max is criticizing is if a workers work one hour, they get a voucher saying one hour. Right? So it's actually denominated in time. And the voucher can then be used to, receive products which take on average one hour to produce. So, the idea is that every worker would get sort of the prod products that took the same amount of time that he sort of invested into production. He would he or she would be able to get out of, socialized production as well. What Matt criticized about this is, well, you can't do that because you can't pay out the entire product to workers to sort of, you know, consume individually. First of all, there are a lot of people who can't work who, might also have to be provided for. So he, he thinks we have to make some deductions for that. He also mentions investments or, kind of like something like insurance or bad weather funds, right, for for catastrophes and things like that. So what he then proposes is that, actually, only part of, part of it should be, given out to workers in this way, and you make some deductions from from that. So instead of receiving a one hour token for one hour of work, you might only receive a fifty minute or forty five minute token or something like this. I, you you can think of it in like a tax basically to fund, social expenditure and public expenditure and investment and so on.
Okay. Interesting. Yeah. So then yeah. I guess even just even thinking about that, I can already imagine kind of like, yeah, just some of the issues that may arise out of that type of system. It seems to not be very, malleable to, what types of external or internal, types of forces that could sort of move the system in which, like, you know, where yeah. You you could potentially not afford particular things because of supply and demand, of those resources. Or something could be, like, it takes an hour to make, but there's only, like, five of them. You know? Like Yeah. Yeah. So so the the problem can arise basically if
during the planning process, so we there's some kind of process for deciding any, production plan. Right? How many things or what what kind of products are we going to be producing? And we might have, you know, decided to produce 100 shoes. But then there are a lot more people that want to want to get shoes than than we actually produced. Right? Because we have to distribute them after the fact of production. So we've already produced these things, and now we distribute them. And, you know, maybe at the at the token price, the the labor the average labor time that's needed to produce them, a lot more people want to suddenly get shoes than we anticipated. Right? And now the question becomes, well, how do we, in some way, ration the shoes? Right? Who gets them and who doesn't get them? Right? And, if you don't have some you need you need some way some way to to ration this, basically. And if you're just sticking to to, the labor prices, basically, what's gonna end up happening is that factors other than as I was as I was describing earlier, factors other than who who has these vouchers is go are going to decide who gets gets these shoes. And I don't think that's ideal. It kind of, means that the token suits the purpose. No.
So how does your do you wanna explain a bit maybe how your proposal in your paper tries to solve that problem or alleviate the problem? Yeah. So the idea is taken from from market socialist proposals who,
so market socialists, usually advocate adopting some features of the market within a socialist context of public ownership and the needs of production. Right? And I'm doing this here just for consumer products. Right? So Marx's proposal for labor vouchers, that's just for consumer products. It doesn't affect the means of production, productive resources, or something like that. Right? So it's just for consumer products. And, and the idea then is, well, you regulate the prices towards market sharing rates. So if you notice that more people are willing to use their tokens on shoes, so maybe, you know, the shoes are leaving the shelves shelves in the shoe shop faster than we're producing them at at the moment, and it might take some time to, you know, ramp up production. Then you increase the price for shoes. And if it's the other way around, if you're noticing, you know, with all these shoes piling up, we keep, you know, producing them, and they're all piled up in the shop and no one wants them at the current price, then maybe lower the price to, to stop them, you know, just going to waste and not being used in the way they intended to be used. This would obviously be particularly important for perishable goods. Right? You don't want want them to just spoil. So, so you would lower the price. And, this is kind of like a trial and error process. Right? You have to see, you know, how much do we really need to lower the price or increase the price. But in the end, it's supposed to get to the point where where you add a price where supply and demand are matched. So, actually, exactly as many people are, you know, using their tokens for shoes as we are producing shoes. Right? That's the ideal equilibrium condition.
And how how in your proposal do you think that that could be calculated? Well, I guess something like that would require this information to be available to someone or some entity, some group to be able to make that decision to do that and that would be in coordination with potentially thousands, millions of producers of this consumer good?
Yeah. So, I mean, this is something I take up from from the towards a new socialism model by Paul Cocksure that I'm in control. You can use, a feedback control mechanism to approximate these market clearing rates. So, there are different controllers, and one would have to do, you know, some more research to figure out which one might be best suited for this case. But in my proposal let me just think. I think I use a simple on off controller for this, this particular problem. That means that, you know, if the price is higher, if the sorry. If the demand is higher than the supply, then you owe it then you increase decrease sorry. Increase the price. If the demand is higher than the supply, you increase the price by sort of a fixed percentage of, of the price, right, by 1% or something like that. You could also use a proportional controller where it actually matters how much higher the demand is than the supply, and then there are all kinds of, more complex controllers than that. And but in the end, it is a trial and error process. Right? So you're just making these sort of tiny adjustments, which you know are roughly in the right direction because you know whether the supply is higher or lower, whether demand is higher or lower than supply. So you know which direction you have to adjust the price in, but you don't necessarily know how much. Right? So you just have to have to try it out. And and control is basically just a way of formalizing how much you're going to make how how much you're going to change the price every time based on the observed difference between supply and demand.
So, like, for some people kind of on the surface who may be listening to this and wondering about the system and, like, on the surface for them, it may not sound like it's all that different than what we have now. Like, what we have now is, like, of course, prices go up and down based on supply and demand. That's econ one zero one. Yeah. You know? How would you say like is like the the differentiator?
Yeah. So I mean, it is it is an adoption of, something very much like a market within a socialist system. Right? So that's why it's taken from from the market socialist to advocate precisely for that. The big difference is, first of all, that's kind of what characterizes socialism, is you have public ownership in the means of production. And secondly, at least in my proposal, I mean, there are market socialist proposals who go much further than this, who use markets even, within the sphere of production between different firms and so on. Right? But in in in my proposal and also the towards a new socialism proposal, this is only used for consumer products. That's the first thing. Right? So this is only for consumer products. You're not trading, machines or productive resources or land or something like this in this way. That's only for end products for consumers. The second thing, and this is a point originally stressed by Marx, is that these vouchers somewhat differ from money, in that they are not exchanged or, as Marx says, they do not circulate. So, when you have money and you pay for a loaf of bread at your local bakery, they they now have that money, and they can use that the bakery can use that to pay for ingredients, pay their staff, and so on. Right? And then their staff uses that to buy their groceries, pay their rent or something like this. Right? So the money keeps changing hand. It keeps circulating around in in the economy, and that's because it's being exchanged. One person receives a loaf of bread, the other person receives the money, can then use the money to exchange it again. These tokens are somewhat different because, they basically have a onetime use. You you you you you get issued a token, for example, because you work in a factory or something like this. Right? You get issued this token, and then you can use it one time, redeem it for a certain amount of product out of the socialized, out of the social provision, social basket of goods that has been produced. Right? But then the state or or whatever agency is sort of put in charge of managing this doesn't get this token or this voucher and can then use it for something else. Rather, it's more Kotcher and Kotrell used the analogy of a theater ticket, right, which gets deleted, which get it gets destroyed once you've redeemed it and, you know, entered to see the show. The theater has no need for the theater ticket. It's just a piece of paper that they can, you know, rip apart, and it it just symbolizes that that as long as, you know, you haven't seen the show, you have the ticket, you have the right to to access the show. Right? And after that, the the token itself doesn't have any value. It it can just be destroyed, and, it's not going to be used anymore afterwards.
Mhmm. Yeah. It's, I guess it's it's more of a point system or, like, a record keeping rather than necessarily, like, as an incentive mechanism
for pushing production, I guess, if that makes sense. Well, I mean In a way that cap capital is being an incentive mechanism. I mean, there is there are incentives, but I guess there's different incentives. Yeah. I mean, it it it can still be an incentive. Right? So if if we link the the amount of tokens that people get to the the labor time that they contribute to production, then it's can still serve as an incentive for people to to work. But but, yes, it is basically a way of record keeping. But you can argue the same thing for money. Right? That certainly modern fiat money, not necessarily if you if you think about, like, commodity money. You know, people have used gold, obviously, was a big one in the past, but people have also used, like, rice or bags of rice or wheat or something like that or alcohol as, as, as money. But modern fiat money, you could say, is also just a way of record keeping. Right? It's just, it's just, most most money nowadays is digital. So it's, saved in in a in a bank, either a commercial bank or a central bank. They just have a spreadsheet
which says for various accounts how much money is in there. Right? Right. But I guess it's a difference in changing the relationship of credits and debits or, like, how credits and debits happen or the direction of credits and debits.
Well, so, the difference is, when these tokens get deleted. Right? Or you can you can see you can also see them as an IOU. So, I mean, I I think I think modern monetary theory, which has been gaining some traction in The US recently, basically got it right. I mean, they're drawing on all their people, the state theory of money here, about what, you know, what makes this money. You know, it's just a just a an entry in a spreadsheet. What makes this, like, valuable? Something that, you know, people are willing to work for or accept in in exchange for for things which have actual use value. Right? The reason is that the state demands that taxes be paid using that money. So, and when when you pay these taxes, you can basically see it as these tokens being deleted. So the the state spends these tokens, these IOUs into the circulation, they're an IOU that says basically, okay. The state owes you that they're going to accept this as payment for taxes. Right? They spent this into circulation, and then when people pay their taxes, these get taken out again. Right? The difference with labor vouchers or labor these labor tokens is that after the state sort of has given these, tokens out, they take kind of take on a life of their own. They use in the private economy to facilitate exchange between private actors. Right? So people, you know, using them to pay at a bakery and so on. The difference is, so the difference with tokens is that they are not used to circulate in a private economy. Rather, they are just given out to people and then deleted again as they don't pay taxes, but rather use them to receive their fair share of the social product. Could we say something spicy and maybe that in a socialist economy,
there would be no taxes or there could possibly be no taxes?
Yeah. This, monetary system. I make I make a claim like that in the in the paper, which is which is somewhat somewhat bold, of course. Right? I I but I I generally think, that there's a lot of things, you know, which people might, you know, associate with taxes because there's still going to be, you know, resources used for public projects in some way. Right? But I don't think it has to work through an actual tax. These tokens already have the the value or people, like, are willing to accept them as payment for work because they can use them to redeem them for for products for for consumer products. Right? So there's no need to, to tax people to accept to accept these tokens, which according to modern monetary theory is the primary purpose of taxes. It's not that the state needs the money needs taxes to get the money so they can spend it. No. It's the other way around. They first it it's state money, and they first have to issue it. Right? And they can create as much as they want from it. It's it's their it's their money. It's their currency. They can issue as much as they want from it. But they need taxes because, otherwise, people have no reason to accept it. Right? But if the state says, oh, but you need to pay 1,000 of these, otherwise, we're gonna send you to jail, then suddenly, you know, people are like, okay. I'll I'll take that because it's a it's a jail a get out of jail free card, basically. Right? You don't need that, in in my proposal because people already have the incentive to accept them because they can use them for for products out of out of, social production because the state basically, guarantees people that you will be able to use these tokens to get, you know, your groceries and things like that.
This is a this is a proposal kind of post we have established the means of production in public hands. Yes. Exactly.
So that, so you don't so you then don't need reasons for that. But of course, you're still gonna have public, public projects. Right? People you know, there's gonna be public infrastructure, for example. Right? But you don't need a tax to do that, because you have, you have kind of this, like, social planning of the economy anyways that could just dictate that, okay, we're actually going to use a certain amount of the resources available up to us, a certain number of workers are actually going to work on this project. So it's a matter of redirecting physical resources. It's not money, that is needed for this and thus, you don't need taxes for
it. You heard it here first. There are no taxes in our socialist economy. Tell your friends, tell your right wing uncles, no taxes under socialism. Hi, everyone. If you're enjoying this episode so far, be sure to subscribe, leave a review, share with a friend, and join the crypto leftist communities on Discord or Reddit, which you could find links to in the show notes. If you're enjoying the interview or find the content I make important, you can pitch into my efforts starting at $3 a month on patreon.com/theblockchainsocialist to help me out and join the newest patrons like Ralph, p. Patil, Ohio Killeen, Mohammed, Bagelface, and Andrew, which really helps since making this stuff isn't free in terms of money or time. As a Patreon, you'll get a shout out on an episode like I just did and access to bonus content like Q and A episodes where you can submit and vote on questions you'd like me to answer and I'll give my thoughts in roughly twenty minutes. In the last bonus episode, I analyzed applying the anti CAPTCHA framework made for DAOs, but towards left wing organizing and the specific challenges that they face. I thought the episode was pretty interesting, and I'm hoping to write a piece based on what I spoke about for it. Of course, I'll still be making free content like this interview to help spread the message that blockchain doesn't need to be used to further entrench capitalist exploitation if we put our efforts into it. So if that message resonates with you, I hope you'll consider helping out. This all sounds, you know, really nice and interesting. How have you thought about such a system of socialist tokens? Like how would it be run maybe from a technological standpoint? I think, you know, do you do you think that do you have like a specific technology in mind? Like this this is how we're gonna do it. We're gonna get MongoDB. We're gonna get, you know, like this type of database and like we're gonna run it. We're gonna have servers here and there. Yeah. Like have you gotten, like, what what kind of level of, of that part of the proposal do you think is, yeah. I guess or what are the important maybe technological things that need to be there? Yeah. So on on the distribution side, this this
this whole thing with the tokens, I think it's technologically, you can do it very simply. It can be very simple. There's nothing, you know, new and fancy that's needed for that. Banks have been doing this for hundreds of years. Right? And they've been, of course, originally using, doing this. Not I'm not talking about, you know, gold money or or or even paper money. Link spreadsheets, right, which can be physical spreadsheets. You can just keep a list and and keep a record of, you know, who has how many tokens, and then you, subtract some of that when they use that to redeem redeem them for, for a certain amount of products or something like that. That's basically what banks have been doing for hundreds of years. Obviously, now, you know, they're doing this digitally, so they have digital spreadsheets. I've heard that a lot of the technology is very outdated now that they use for this, that they're still using stuff that was developed in, like, the seventies or eighties. I mean, it works. It it works, and I think you could you could, in principle, use the same technology. I don't I don't think there's a technological challenge here that we necessarily need something new to do this. Right? It's quite simple. Yeah.
I'd say so, like, I mean, still unsure if I will cut this out or not, but, I have done in a previous life, I've worked for SWIFT, you know, like the giant, international banking transfer cooperative technically. And yeah, their system is, well I mean one, it's huge. It's like nobody, no single person understands the whole thing. Like even working directly with the IT people, they're like Yeah, I don't know that system. That guy knows that system. And, you know, like, they have like two different systems for keeping track of like different types of payments and different KYC information that they have to have legally, different AML stuff. Like, they they have to have a blacklist for any country that gets put onto the, the America's, economic sanction list. Like, they have they have so many complicated things and it was all like originally laid out in the seventies and now like things have gotten just more complicated. Other people's systems have updated, other ones have not. Like it's it's it's Byzantine. It like it's when I was it's like I was looking at, you know, they were like laying out like the architecture of like this entire thing and like it was like looking at a, I don't know, just like a disfigured like zombie of like of something that I'm like this is what runs the international economy. Oh, my God. Like it was pretty it was pretty astounding, that that's how they did it, but that's how they did it. And it but to me it was also like at that time I was like, oh, this is how people this is how banks get away with crime. Just like this system is so complex and nobody understands it, to such a degree that, but it does like, of course, all the basic stuff for us as consumers, what we see on our bank applications and whatever else, like it works for us at the end of the day. But they have, yeah, it's pretty it's pretty incredible. But it kind of, yeah, sometimes what what is for me the question is not even necessarily like, oh can we do we have the technology for our socialist utopia to put in our socialist, systems and types of economics, but also it's it's like I think we're way beyond the point of being able to technologically do it, in that we have databases and we can configure databases and however we want. But it's more like, how do you want that to manifest itself? Like, what is the exact relationship that the, you know, the last person in the quote unquote value chain of your, economic system? What is their relationship to the system in the whole? Like I've had just a lot of arguments with kind of other people online that are like, oh we just we'll just have like a centralized database and it will be controlled by the workers. Like the the Vanguard state, Vanguard party will control the central database for all of like our economic transactions. And to me, it's like that's possible. We could do it. Like that's, you know, there's nothing that it's technologically probably, easy, feasible, but it's also politically, I think, questionable. Like who then is in the vanguard party? Who then has the admin controls inside of this database? Like what if this one database, which is kind of silly, this one database like falls? Like what if it's like out of order? What if, you know, like there's a storm in the area? Or the server farm that it's in like catches on fire like it did with like a couple of Google ones in the past? Like where is like the resilience and the necessary redundancy that you're going to need for a type of system, especially if you wanna rely on it at a at a global level? Anyways, sorry for the rant. Yeah. So,
I mean, I I I know that people are also concerned about things like, you know, fraud and, you know, would there be I mean, what what you mentioned, like, you know, what what a central government, you know, be able to to abuse this in some way. Right? But I think what's important to keep in mind is that, this is this is a very the the bank clearing system is a very transparent system. Right? Because in the end of the day, they're gonna have to the bank has to provide you with a bank statement. Right? And you're gonna be able to check it and see, you know, okay. This is actually yeah. This is how much I had on my account. This is how much I, you know, went off it. This is how much I should have gone on it. And if there's something wrong, you can, like, you can complain about it. Right? And and you're gonna know that that something something is wrong. Right? Because these are basically just records, and you can, in principle, also to address the point of, like, the the the server file or something like this. You can have multiple copies of a record. Right? If if it's just a spreadsheet, you don't need to save the spreadsheet on just on just one one server or something like this. Right? So I don't I don't think I I was being facetious with that example. Just like the the stupid argument that I had with someone. Yeah. No. But that's so this is this is like I think I think, you know, that we have to give the bank clearing system more credit here than than maybe some people do that you know, it can be very transparent. It can you can have multiple copies of it, so it can be relatively secure. If someone does something, like, improper and, you know, maybe they, you know, add some money to the account or something like this, there's a record of that. Right? We can see, like, you know, how much was on the account beforehand, how much is on it now, where's that money coming from, and so on. Right? So that I don't think that's that's really the problem. There's a problem, I think, in terms of privacy, some more the other way around. Do we want the government to, you know, be spying on us? I think a lot of people make a good case that we should not, you know, completely get rid of, physical cash, precisely because it allows people to do things that they don't want a government to know about. Right? And then, obviously, you know, you can have your argument, oh, but that's, like, criminal activity. But then the thing is, you know, maybe it's a good thing that sometimes it is possible to do things the government doesn't want you to do because otherwise Just because something is, illegal doesn't mean that it's bad. Exactly. Yeah. And, I mean, that's I think I think one of the main, you know, obviously, like like, you know, we're use we're we're moving in a lot of countries. We're moving away from physical cash. Germany is actually one of the countries that still, you know, people stick to their physical cash quite a bit. But in other countries, you know, people are paying more and more by card, and, you know, the exception to that is obviously, illegal things like like like drugs, for example. Right? But are drugs bad? Yeah. And the question is, you know, do we want the Should that even be illegal? Yeah. Do do we want the government to have the power to completely control, you know, our lives like that? Right? So I think there's some some argument to be made along those lines, for sure. Yeah.
I guess I'm not I'm not entirely sure, like, when it comes to bank clearing, like, there is this, like, bureaucracy. There is, like, this big long process for going through all these different things. I guess I'm still a little bit, and I guess I guess critical just like the system generally that I have like lower maybe a lower level of trust just because, I mean look at look at Deutsche Bank. Look at, like, all these different very large financial institutions that every once in a while it's like, oh, oops, we were doing, like, billions of dollars in fraud. Sorry. You know, pay a fine. And then they go on with their lives. Like, I think that there is on the consumer side, like for the average consumer, there is there's some amount of transparency. There is like you get a bank statement and 90% of the time you can, you know, put in a request or whatever that like, oh, I made a mistake or like my credit card was stolen or whatever. And usually and they fix it. It's also ignoring kind of like the the predatory practices of just kind of like having private financial institutions, of course, which is just I think that's a completely different topic. Yeah. But yeah, I guess one of the things that does attract me to cryptocurrency world is that there is a more granular version. Like you can see the you can see the inside of the black box more so than you can see it as it exists today even though for, you know, 99% of people who live in Western countries like they're not going to have so many problems. Yeah. Well, I mean, obviously, there are other problems with the financial system as well. Right? Which, you know, has Yeah. You know, there there are some questions about, you know,
how much credit, is being created and for what purposes. Right? Is credit Yeah. Created
for, you know Most of the credit is made by these is made by private banks. Like, it's not the central banks as, you know Exactly. Libertarians
will say, of course. Yeah. Most most money is created by by private banks. Right? Very little money is central bank money, except cash is central bank money. And then, you know, the the, deposits that commercial banks have at at the central bank. But most credit is being created by private banks. So private banks control how much money there is, how much credit gets created, which has enormous influence on on on economic activity. Right? Is are they going to be issuing, And and then also, who are they creating this credit for? Are they going to be issuing credit so, that people can buy houses? These are non GDP what's called non GDP transactions. So, basically, people are just buying an asset which already exist, Or are they, creating credit for people, you know, to to set up a factory or something for for firms to set up a factory or something to start producing things, which actually creates GDP? But then also, you know, what kind of production are they, are they giving credit out for? Is it are they going to Fidget spinners. Are they going to find Lot lots of fidget spinners. Oh, I mean, fidget spinners are one thing, but I was thinking of, like, oil drilling or or or or coal prices like that. Right? Yeah. Yeah. Yeah. Which are clearly environmentally destructive. Or are they going to be financing the alternatives to that, right? So I mean, the the even even a capitalist economies that that has historically been concerned about that, especially in East Asia. Countries like South Korea, but Japan and China, I think, also have been using this. They've they've had, like, you know, quite strict credit controls where they've basically told banks what sectors, what industries they're supposed to create credit for and how much. And
But that's that's communism.
That's Sounds like it, but Yep. When the government does those things And has done this. Yes. But, you know, South Korea has been very successful with that as well. And they're not usually a country we'd consider socialist or communist.
Yeah. So last question I wanted to ask just because, another reason why I liked, your paper and your work was that it reminded me of a piece that I had written in the very beginning of the pandemic, I think, where, I sort of propose a way of managing housing in a socialist society. I just use the mushroom kingdom as kind of like a, as a fun way to kind of imagine it. It's it's different than yours since yours is focused on consumer goods. I was using imagining tokens as, a representation to right for to a right to housing. So everyone would kind of in our social society would see their housing token. That token can be then spent based on, who they are as a person, like, whether they have a family, whether they're, like, a single father or mother, for how much, housing they actually need, you know, assuming that if you have a family, you'll need a bigger house, and if you're single, you'll need a smaller one. But everyone gets gets that token. Smart contracts could sort of manage if you have, like, if you're using them for kind of, like, demographic type of information per person associated with their identity. Like, it could sort of automatically, in real time, kind of adjust, kind of what your rights are, through your housing token. But, yeah, I don't know. I I think you you had a chance to kind of skim through it, but I'm wondering if you had any, any thoughts on that proposal and whether that fits into as, like, a, another part of the economy in your in the in the dApp rich, socialist utopia?
Yeah. So I I I think there is an important point there, which is also something I discussed in in in the paper because because Marx really stresses this is, people have, you know, people might have different needs, for example, for housing, which isn't related to, you know, how much labor time they put in. Right? Some so even Max mentions, you know, one one worker maybe has more children than another. Right? And, what your proposal is is con is is considering this difference and then saying, like, you know, okay. If you have more children, you get sort of more tokens, and and they give you, like, access to to a larger house. The difference, of course, to my proposal is that you are using, like, one type of token particularly for housing. Well, my well well, I would have one kind of token, and this is also, you know, even even a max proposal, that can be used for all kinds of different products. And I think the advantage of that is that you're leaving it to the individual to to decide, do I want to use all of my tokens on housing? Maybe maybe a big house is really important to me or a house in the city where in the city close to the city center where where housing space is more popular, more on demand. Right? Maybe that's really important to me, and I want to use all my tokens on that, and I'm going to, you know, make cutbacks somewhere else. Right? And maybe someone else is gonna say, actually, I don't mind living in a small cottage out in the countryside or something like this. But it's more important for me to then, you know, be able to use my tokens to go on holiday more often or something like this. Right? And I think I think something like that is important because we shouldn't be, you know, be, like, paternalistic and, you know, telling people, oh, you get, you know, you get a big house, and, you don't. Right? I think I think people should we we should take this into account, how many children they have and how we distribute these tokens. So I think if you have children, you should get more tokens. Right? But it should still be left to you to decide how to use them. Right? If you if you think, you know, you can you can actually, get around with a smaller house, but but something else is more important for you, like taking your kids on holiday or something like that, that should be your decision. Right? And and by having these tokens, be sort of universal, and they can be used for all kinds of consumer products, that gives more freedom to the individual, I would say. Yeah. Fair. Part of this proposal, what I was trying to do is just, like, really restrict my scope
of, like you know, specifically at the time, it was kind of there was this whole eviction crisis because, nobody could go to work in the beginning of the pandemic, and so they couldn't pay pay their rent. And I was just trying to point out, well, this whole problem is happening because of, like, this we've just left the housing supply up to markets. And this is kind of like the the problem of that. This is kind of like what the,
side effect of doing this. And so Yes. But but I think I think the problem here is not just, not just that you that there's a market. It's in combination what you have to take into mind with extreme inequality, which is, of course, you know, facilitated by the market capitalist system. But you then get, you know, people who earn relatively well, who can then, you know, with big housing problems here in Berlin also. Right? You can then, you know, rent out, like, quite big apartments, that they don't necessarily need, but they have the money for it. Right? So so they can afford it. While other people who might, you know, have more more they might be single and rent rent running, renting this huge apartment, but other people might have, you know, several children, and they could actually, you know, make better use of that apartment for, for their children. But they can't afford it, right, because they don't they don't have the money for it. Right? So that's a that's a mission, not necessarily of markets, but of an unequal distribution of purchasing power. If you had a social system, I'm assuming that we're going to have a fair distribution of of of purchasing power. Doesn't necessarily mean equal. You could say so, you know, it's fair for people who work more hours to have a little more. It's fair for people who have more children to have more tokens. So it's not necessarily an equal distribution of tokens, but I'm assuming it's a fair distribution of tokens. And if it's a fair distribution of tokens and people you you know, someone wants to use all their tokens on housing or the majority of the tokens on housing, and that's the prior because that's their priority, then I think that's fair enough. Right? If it's if it's based on the fair distribution of tokens, then that's okay. But But that's obviously not what we have at the moment. Yeah. We have a very unfair distribution of tokens,
at the moment, causing a lot of these problems. Yeah. It was, I think it's totally yeah. For me, I am just glad that we can have this conversation, to be honest, to talk about, like, maybe some differences between how we can turn that into a reality or not or, you know, which type of reality is, like, more preferable and, like, you know, go towards a direction to where both of them are possible and we play around with each of them and then go more towards one. That's kind of like how I wish we could, go about an experimentation with these type of political ideas. But, of course, we live in a world where it's very difficult to do those type of experimentations because of capitalism. Yeah. But, yeah, it's something that I think for a lot of people who are listening, who are maybe more on the crypto side, like I'm really glad that they got to hear this perspective from you, like to kind of break down what the, what the actual issues are when it comes to coordination or the lack of coordination and why we're sort of coming up to these issues of inequality, how it's not something that is just, like, because there is a government, it's causing problem. It's something much more deeper, much more rudimentary, and, you know, having to do with the issues of of capitalism.
Yeah. I I I wanted to ask you a question as well. So I'm I'm I'm somewhat critical of of of Bitcoin, which I think I understand to a sufficient degree to be able to make a judgment on that. But I I am aware that there are, like, other applications of of of, like, blockchain. And I wonder if if you have some idea how how this might be used in the kind of token system that that I'm proposing. Is there is there a way of using blockchain for this, and what would be what would be the advantage of that compared to just, you know, spreadsheets, then clearing system, or technology?
Yeah. For sure. So I mean like, yeah, this this use case that, that I shared with you, on the housing token is one that I've detailed out that I think sort of fits within kind of what you're asking. But for me, I mean, I can see a potential world where, like, a lot of the stuff that you're proposing could be run through something like a blockchain or a distributed ledger. It doesn't necessarily have to be a blockchain exactly, but, some sort of distributed system. I just think that from a technological standpoint, from a resilience and redundancy standpoint, like to me that is much more ideal than, going through kind of like different central databases that have different, jurisdictions or different types of ownership, or even that are like completely, run by like one one party or whatever, I think there are like how it exists right now is not of course how I would propose we use it in our ideal socialist utopia. But I think if we're talking about ideal socialist utopia then we would have the space and the time and the ability to kind of experiment with different types of levels or different types of mechanisms that underneath kind of help propagate the system. So like at the moment the way that especially Bitcoin, but I mean, yeah, 99% of other cryptocurrencies, like the incentive to move forward to to mine a new block, to create a new block, to continue forward is basically the profit motive. Like, that's, so, like, people will say, like, that's, perhaps a problem and I think that is a problem if you were want to apply that in a socialist world. But it's also why it works very well under the world right now. Like that's, so it like it to me that's like a kind of a silly excuse as to say as to why it doesn't work whenever it clearly does work. But I think that kind of like that system of incentives can be it's very it's a design space. Like we're what what the critique that I hear all the time is, like, is that it's focused so much on accumulation, profit motive, which is true, but this is, like, the way it was designed. And we're, you know, luckily, code is very malleable. It's very, you know, customizable, and we can change it to fit the type of context or the type of social relationships that we want to have, depending on the worlds that we're we're trying to go for. So I think there is there is like that's that's like one layer if you're talking about like, the the the most base layer of like a technical infrastructure for why blockchains are interesting for this type of thinking. But also on top of that even like I think we can make kind of I don't know if compromise is the right word, but like we can deal with the realities of right now, by using currently existing blockchains for experimentation for our own economic systems. I think, smart contracts are it's a, you know, Turing complete programming language. You can embed political economy inside of of computer code in a way that was not really possible before, in a way that is also resilient. I think one of the one of the things that I sort of imagine, you know, Socialism kind of coming about is that it's not going to come about like very simply or it's not going to come out all at once. It's going to come out like there's going to be one side, there's going to be another side, there's going to be, you know, reactionary forces that are going to, like, undermine everything that you possibly do. And so having a type of technical infrastructure to sort of be able to resist that rather than having a central database, system like is tactically a better idea. It's kind of the thing that I have in mind. But you know, just saying that, let's do we can already
Sorry. Is is your proposal that doesn't able to solve this, the energy usage problem that Bitcoin very clearly has? And
Yeah. I think that's already I think that problem is already solved. Yeah. So right now, Ethereum doesn't run on proof of work. It runs on proof of stake, which is 99%, 99.9% less energy. So, and, you know, we saw its transition from proof of work to proof of stake. So like to me, I think it's not it's it's it's a losing bet to bet against technologists or like people who are trying to like, improve these type of very technical systems because, like, these technical problems don't they don't have necessarily the type of political problems, that generally stop the left from being able to solve problems, I guess. And usually those problems just get solved as they have, like, repeatedly over and over been. But, like, just to continue, like, using smart contracts and using, you know, this idea of decentralized autonomous organizations or DAOs, using things that are currently used in the decentralized finance space but probably applied with a different logic, I think we could imagine putting your type of socialist token system that you've kind of outlined and creating kind of like a mini playground in which, we can just see that working and happening and have to be in a space to where it could have meaningful effect. It's sort of like if you were to put this type of system on your own little database in your, you know, at home in your computer, probably there won't be so much usefulness to it or there won't be so much action on it. But if you were to apply it to a blockchain system, then you would automatically be plugged into the already existing sort of crypto economy. So you're already you're already in you're already playing becoming a player inside of this game, or you can become a player inside of this game directly, which I think is, like, a more powerful thing than most people kind of realize, even though a lot of crypto economy is, like, a lot of speculative bullshit, of course.
Yeah. So, I mean, as as I said earlier, I I would maintain that it is perfect perfectly feasible to, you know, realize this this, this kind of token system with sort of, you know, bank clearing technology, spreadsheets and stuff. Sure. Quite quite simple. But, I mean, yeah, but definitely it'd be interesting if also, like, you know, other people are interested in in working more on this to see, you know, if and how this could also be implemented during using blockchain. So, yeah, I'd I'd be I'd be certainly open to to considering, the possibility.
Yeah. That'd be lots of fun, honestly. We should stay in contact. I can get I can find some, some smart contract engineers to, to help you out on that.
Yeah. Might be something for the team.
Yeah. Well, thank you so much for coming on. I could talk about this probably forever, but, yeah, I guess is there anything any last any last words you want to leave with us or, anything you want to plug before we before we end the call?
No. Just thank thank you very much, for for the conversation. And in general, you know, I think it's it's good to see, you know, peep people on on the socialist left also, you know, engaging positively with with new technology. You you know, I I have my criticism of of Bitcoin and, and then you share some of those concerns as well with regard to that particular currency. But, you know, there there there tends to be this tendency of people to then be skeptical of of technology in general. It's not it's not even just limited to the to the to the crypto space or the blockchain. Right? There there's this tendency towards criticism of technology on the left, and, I think, you know, conversations like this really help to to overcome that and to try to think about, you know, how can we use modern technology to, actually, implement and improve, socialist economic system. You know? Yeah. Absolutely.
Doctor Philip, Daprich's paper is called Tokens Make the World Go Round, Socialist Tokens as an Alternative to Money. I highly recommend people, check it out. It's open access. And read the paper. It's open access. If anybody can can read it, it's on Springer, but I'll link it in the show notes so you guys can read it. Thank you. Alright. Thanks so much.