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The Ideal Economy

Algorithms *Mathematics *Billing systems *Community management *Distributed systems *
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I am not an economist, but in light of current events with cryptocurrencies and the economy in general, I would like to share my thoughts on some kind of ideal economy, around which everything is happening now.

In order to understand the meaning of an ideal economy, you have to start at the base of all economies. For example, let's say there is a small village. Each resident has a profession, goods to sell, and a list of what they would like to buy. To exchange services and goods, the inhabitants need money as a kind of buffer for the difference in the exchange. In general, buying and selling services and goods is all that interests modern society.

For example, there are 5 inhabitants, and money for all 100 (rubles, dollars, euros). Suppose they have enough of these 100 rubles to exchange with each other and do not need more and less. The village has the Internet. The 5 residents opened a website and exchange these 100 rubles between them through the site or mobile application. But how does this site work? What if the administrator of the site secretly adds money to himself? To prevent this from happening, they made the account status of each resident open. Now every member can sum up all the accounts and get 100 rubles. All participants always have 100 rubles. Any administrator was not able to draw money for himself, because then the amount of money would be more than 100 rubles.

For the convenience of calculating, the sum of money was made not 100 rubles, but 0 rubles. To do this, from the state of the account of all participants was subtracted, half of all money. Instead of 0 rubles, it is now -50 (minus fifty). 0 means 50 rubles in the account, and 50 means 100 rubles in the account. With each transaction between residents, the one who paid got minus to his account, and the one who sold plus.

For example, resident 1 bought goods from resident 2 and transferred 10 rubles to him. After that, the account of resident1 was minus 10 rubles, and the account of resident2 was plus 10 rubles. Thus, regardless of the amount of money, the sum did not change, and money was created at the time of the transaction and there was exactly as much as was needed.

Years went by, the village developed and grew. New residents appeared, and they also wanted to get into the site. When new residents were added to the village, they could either earn money or they were given trust credit. To earn money - that, I think, is clear to everyone. And the credit of trust - this is a kind of mechanism by which the site could create more than 100 rubles.

The village eventually became a city, and like in all cities, the city had a mayor. Who monitored the site and added new members and gave them the credit of trust. Trust credit is a kind of restriction for each resident to leave in the minus. For new members it was 0, and for old, verified this lower limit could be -100, -200, -300.... So, if sum the lower limits of all members, it is possible to receive quantity of all money on a site, but it did not matter, because summing up all states of accounts of residents should result in zero. That was the main verification.

It turns out that all participants with a negative balance owed money to participants with a positive balance, and if all participants with a negative balance reimburse all participants with a plus, the amount of their plus, it turns out that no one owes anyone anything.

As time went on, stores and markets opened in the city. Some stores had too much demand for goods. In order to fight monopoly, it was decided to introduce a maximum of money. A store could not earn more than a certain amount of money. The money that the store made more than the maximum went to charity.

The mayor could now change the maximums and regulate monopoly in the city and change the minimums, thus regulating the amount of money in the city and inflation. All residents were automatically or manually charged for city services such as police, fire, ambulance and emergency services. The poorest residents were known to everyone and could always be helped by wealthier residents. At the same time, the wealthiest were also known and everyone understood that they had earned their money honestly. Stealing money lost its meaning, because everyone had interest-free trust credits, and the mayor regularly monitored inflation, and it was perfect in the city. One small server handled all of the city's transactions, because there was no need to use cryptocurrencies or blockchain. Every resident had a rating, which was formed by calculating the grades for transactions, and basically everyone had 10 out of 10. And those who had a low rating tried to increase it in every way possible, because for some their income depended on it.

It's a model of managed capitalism. It can manage everything necessary for the harmonious development of the village/city/country/world.

If you apply this model to the current economies of the world, it is clear that in one way or another all economies are striving for managed capitalism. Now to become a competent economist you need to know the above model of managed capitalism and be able to give advice on how to bring the current economy a little closer to a managed economy. Of course, it won't convert at all, but it is possible to get closer.

We can (it's all been done before):

  • introduce rating, as in managed capitalism;

  • manage inflation and monopolism as in managed capitalism;

  • give money to the poor so they are not so poor;

  • reduce the number of banks, because in managed capitalism there is only one, so it can be reduced to one;

  • to introduce mandatory income, as in managed capitalism this is achieved by using the maximum; (the rich reach the maximum, and then their income is distributed among the poor automatically)

  • to fight corruption, because in managed capitalism corruption is practically defeated. Of course, it cannot be conquered at all, but if it can be, it is the same as in managed capitalism.

  • To manage the distribution of money between organizations, as in managed capitalism. Only there it is possible to do this by voting of all inhabitants, while in the current economies it is mostly done by one person.

  • reduce/centralize advertising. After all, in managed capitalism, all advertising can be on one site.

  • to collect donations from all the people. In managed capitalism, this is done as quickly and efficiently as possible, and always on one site, with the ability to track that the money has actually reached the recipient.

Let's look at the current economy.

The first thing that matters in it - is it possible to steal? is who releases the money. The government does that.

They estimate the rate of inflation and try to affect it by releasing money.

So they print a billion, but how do they pass it on to the people?

Some goes to replace old banknotes with new ones. Some part is issued to the population, through complex schemes, through credits. Perhaps made up government orders with markups of 10 and 100 times. Some is injected through the purchase of foreign currency. Exactly how this happens is known to a very small circle of people. For the average person, it is a secret.

No one knows the exact amount of money in the country. Some houses may have billions in stashes, and no one knows about it, and of course this is taken into account when calculating inflation.

Accordingly, everyone is somehow guided by millions, billions, trillions, Forbes magazines, but no one can say for sure whether he is the richest or the poorest.

Instead of the maximums of managed capitalism, there have been created anti-monopoly companies. Perhaps in some cases it is true that maximums alone will not solve the problem, but it would greatly simplify the work of such departments.

This is spontaneous capitalism. It is poorly managed and extremely inefficient, as everyone has probably already guessed. In this kind of capitalism, the worst thing is for the common people. They may not even be aware of them, those who in any way affect the income of the population by regulating inflation. All the inefficiencies of spontaneous capitalism fall on their shoulders.

So people have started to invent cryptocurrencies. They are trying to find an alternative that can somehow move spontaneous capitalism out of the way.

The government, by intuition or having some brains, sometimes tries to straighten the economy out of a severe lurch (or political crisis) by making it look a little like managed capitalism, in the ways mentioned above. It really works. The boat wobbles, but it floats forward.

The issuance of money in such a spontaneous economy is not initially democratic. Because the distribution of issued money cannot take place fairly and equally for all people. The money is not issued directly to the people and cannot be verified.

Most of the money is stolen. There is very little money that reaches the general population.

Let's look at the economics of cryptocurrencies.

I understand that everything there is still in the process of creation and change. But already now we can see the first outlines of a certain economic model.

The money is produced by mining. The money goes to big "whales" (cryptocurrency slang) - very rich people/companies. The sum of money is very difficult, but can be counted - this resemblance to managed capitalism kind of adds to the temptation to use cryptocurrency.

Large movements of money are regularly announced - also similar to managed capitalism, but that's not the main point.

Various systems like the Lighting Network are used to make quick transactions, to be similar to managed capitalism.

There is no governance of the crypto economy. It is the impact of decentralization combined with blockchain. The lack of management means that everything is spontaneous again, and no one is immune to money theft or loss. And in absolutely any amount. Whether it's city funds or one person's.

Since there is no management, this means a severe lack of the social part of managed capitalism. The social part is:

  • managed redistribution of money among companies (when it is necessary to fly to Mars) (simple targeted fundraising in managed capitalism);

  • material equality (having minimums and maximums of managed capitalism that equalize the inhabitants);

  • management of inflation and monopoly (the ability to change minimums and maximums).

Because of this, such an economy would make no more sense than the current spontaneous capitalism. Already we have information that the largest holders of Bitcoin are the richest people/companies, which were the richest before Bitcoin. That is, the use of decentralized money will not change anything, without the social part, which by definition cannot be in it.

There may be some crutches that can add the social part to blockchain currencies, but why reinvent the wheel?

The social part is essentially centralization, which directly contradicts the possibilities of blockchain. Its implementation at some moment requires a ban on transactions, for example, and this is impossible in blockchain or Lighting Network or other cryptocurrency systems.

Inflation of cryptocurrencies is a certain ratio of their popularity to their quantity or costs of mining. Inflation not controlled by anyone - can change, for example, at the will of some large holder who decides to commit suicide and at the end drastically depreciate the cryptocurrency, distributing it to all comers. Or an always-increasing currency means a bubble that will burst someday.

There is no monopoly control at all. We get a bunch of monopolies, kings, monarchies...

Consider decentralization.

Decentralization, for example, allows cryptocurrencies to stay alive, no matter how they are blocked by different countries and no matter how they are fought against.

So decentralization can be different. It can be, drum roll, spontaneous and managed.

Spontaneous decentralization is like all cryptocurrencies, where it is impossible to prohibit the transaction of participants and there is no social part (management).

Managed decentralization is when the database on which the economy is based is decentralized, but there is some manager or group of managers who administer and manage the system. But the system is decentralized and can reside on a group of an unlimited number of computers. This decentralization can be used to create managed capitalism. There can be an infinite number of databases and they can all be managed by different people.

Conclusions

The model of managed capitalism is great, but unfortunately it is difficult to implement for various reasons today. However, this does not mean that we should not pursue this goal. Therefore, it is obvious that to stabilize any economies we should now look at managed capitalism and borrow some traits. This will help avoid big problems with any economy.

The topic is very debatable. So I created a Telegram group to discuss the article: https://t.me/joinchat/bUUO6EIsNJpmMzE6

Replying in the comments does not allow the karma system.

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