The economics of our future world

Taking of moving from the concept of a Universal Basic Income to money without government to tokens to credits, I’ve been reading a fascinating book recently on Star Trek’s economics called Trekonomics. Released in 2016, I thought it would be some frivolous Trekkie’s drooling over the wonder of the Federation’s Galaxies but, instead, it is actually a pretty fundamental analysis of the possible economics of the future. I really enjoyed it and realised why I’m such a fan of Star Trek which is, fundamentally, that it portrays a Utopian vision of the future rather than a Dystopian vision.

Star Wars is dystopian, where everyone is at war with everyone else; Star Trek is utopian, portraying a vision of tomorrow that is far more positive and optimistic. But, in tomorrow’s vision, no one pays for anything, no one has to work, everyone focuses upon the future and the betterment of humanity. I love this.

Therefore, in the spirit of sharing, I highlighted a number of major sections of the book, such as:

At the dawn of the industrial revolution, (Mary Shelley’s) Frankenstein captured the awe and the terror of the machines humans had unleashed upon the world. Such was the power of Shelley’s creature that to this day, dystopia, the “bad place,” remains the dominant story in science fiction.

The enduring resonance of Shelley’s template may explain why Star Trek’s brand of economic utopia has very few precursors or antecedents in science fiction itself. Star Trek presents intelligent machines and technological change as unequivocally beneficial, instead of threatening or even apocalyptic. In that, it stands largely athwart its own genre - science fiction - and in many ways it stands out from the rest of popular culture …

Star Trek's main economic thesis, that machines can eventually free us of the drudgery of work, is almost as old as the industrial revolution itself. It is not at all crazy …

Trekonomics solves Keynes’s economic problem, if only fictionally. In Trek’s universe, most if not all of the real-world conditions that drive economic behaviours essentially disappear. In Star Trek, currency has become obsolete as a medium for exchange. Labour cannot be distinguished from leisure. Universal abundance of almost any goods has made the pursuit of wealth irrelevant. Superstition, crime, poverty, and ill health have been eradicated. For all intents and purposes, the United Federation of Planets is a paradise …

Reputation and honours, the esteem and recognition of one’s peers, replace economic wealth as public markers of status …

These quotes are just from the first chapter, and later chapters explore how money disappears in the future, how that economic future works and more. The book is written by Manu Saadia, an author and economist based in Los Angeles where he advises, and occasionally builds, tech start-ups.

He is fascinated by tzzzhe idea of a society in which material wealth has become so abundant that possessing it no longer holds any appeal. In such a world the only way to gain status would be by cultivating talent and intellect.

“What really makes sense in the Star Trek universe and Star Trek society is to compete for reputation,” Saadia says. “What is not abundant in Star Trek’s universe is the captain’s chair.”

He knows what he’s talking about - he studied the history of science and economic history in Paris and Chicago - and the book is a robust analysis of the future of economics which I can strongly recommend all of us read. It comes back many times to Spock’s words where the needs of the many outweigh the needs of the few, and I know Star Trek is a fiction, but it has an awful lot of base in reality and the truth. So much so, that the book has received quite a lot of important accolades and reviews:

“Manu Saadia proves that Star Trek is an even more valuable cultural icon than we ever suspected.” —Charlie Jane Anders, Hugo Award winner, editor in chief, io9

“In Trekonomics, Saadia reminds us of what made Star Trek such a bold experiment in the first place: its Utopian theme of human culture recovering from capitalism. Smart, funny, and wise, this book is a great work of analysis for fans of Star Trek and a call to arms for fans of economic justice.” —Annalee Newitz, tech culture editor, Ars Technica

“To understand the fictional world of Star Trek is to understand not only the forces which drive our real world, but also the changes that are necessary to improve it. Manu’s book will change the way you see three different universes: the one that Gene Roddenberry created, the one we’re in, and the one we’re headed toward.” —Felix Salmon, senior editor, Fusion

It also received widespread coverage in serious publications, such as The New York Times, The Washington Post, The Financial Times, Business Insider, Wired and The Wall Street Journal (WSJ). Recommended, and here’s the one-hour podcast interview with Manu from the WSJ if you want to learn more before buying:

Oh, and a few more quotes for good measure ...

If “Federation credits” sounds like a fairly generic term for an interstellar currency unit, that’s because it is. It appears to be the coinage of choice in the various Star Wars movies—in the cantina, Luke and Obi-Wan Kenobi offer Han Solo “credits” for smuggling them onto the Millennium Falcon. “Credits” are similarly used by Arnold Schwarzenegger in Total Recall. Business on J. Michael Straczynski’s Babylon 5 is conducted in Earth Alliance Credits.

“People are no longer obsessed with the accumulation of things. We’ve eliminated hunger, want, the need for possessions. We’ve grown out of our infancy.” Jean-Luc Picard

PICARD: This is the twenty-fourth century. Material needs no longer exist.

OFFENHOUSE: Then what’s the challenge?

PICARD: The challenge, Mr. Offenhouse, is to improve yourself. To enrich yourself. Enjoy it.

As a system, trekonomics is predicated on near-absolute abundance, which in turn negates the need for money or market-pricing mechanisms to allocate scarce goods. Nothing—or almost nothing—is scarce.

No scarcity means no money, no price, and no markets. This also implies that in trekonomics’ society, the profit motive does not exist … And, more fundamentally, how do people make decisions about their lives, either present or future, in the absence of money?

Economics assumes that left to their own devices (and with a sprinkling of legal boundaries and tax incentives here and there), individuals and firms will make decisions based on their perceived optimal self-interest. These individuals and firms, by virtue of competing and conflicting with each other, will make more things available at a constantly declining price, thus improving the lot of everyone on average.  Trekonomics, for its part, assumes that the lot of everyone, on average, has been terminally improved. There is nothing left to optimize, economically speaking, when everything is available at zero cost. Self-interest, conflict, and competition may certainly exist, but the reward for winning in the marketplace cannot be monetary because there is  no excess return to expect or gain. The reward is of an intangible but no less real nature: glory.

Reputation as a currency … the value of your reputation is backed by the full faith and credit of the scientific community.

In trekonomics, market dominance or monopoly over a given good or service cannot translate into pricing power and outsized returns. Abundance has replaced scarcity as the baseline. Procuring consumer staples is a trivial matter. That is why, in many instances, it may seem rather illogical and inefficient to take the weight of property on your sole shoulders. It seems that private property in Star Trek is above all sentimental.

Jeremy Bentham’s formulation of utilitarianism, the idea that all humans tend to gravitate toward what makes them happy, and to stay away from what hurts them. On that account, trekonomics could be seen as the highest form of utilitarianism. The Federation is organized in such a way that every one of its citizens gets a chance to maximize his or her own utility.

Star Trek turned away from and even flatly rejected the more popular themes of science fiction. Trekonomics is what makes Star Trek. In Star Trek’s future, technology is not just about the gadgets or about Moore’s law of exponential miniaturization, or even about efficiency and competitive advantage in the marketplace. As Gene Roddenberry, the creator of Star Trek, explained it succinctly in The Next Generation’s bible:

Technical improvement has gone beyond developing things which are smaller, or faster, or more powerful, and it is now very much centred on improving the quality of life.

In Russia, (the Strugatsky Brothers) are as famous as Ray Bradbury or Arthur C. Clarke. Their first book, Noon: 22nd Century, is a collection of short stories. The action takes place in a world where hunger, disease, crime, poverty, and even nation-states have disappeared.

Another major source for Star Trek is Ursula Le Guin’s monumental The Dispossessed: An Ambiguous Utopia. The story opposes an anatomy of contemporary political systems against an anarchist utopia. On the planet Urras, A-lo and Thu compete for supremacy. A-lo is a capitalist society, while Thu is modeled after the Soviet Union. On Annares, the other planet in the Tau Ceti system, life is organized around anarchist principles. The people of Annares do not have personal property; all of society’s resources are held in common. Even in their language they try to eschew the possessive. Annares has a challenging environment: utopia is hard, and as Spock would say, the needs of the many outweigh the needs of the few.

This is how, in his 1967 writers’ guidelines for what became known as The Original Series, Gene Roddenberry describes the status of Earth in the Star Trek universe:

For one thing, we’ll never take a story back there and therefore don’t expect to get into subjects which would create great problems, technical and otherwise. The “U.S.S.” on our ship designation stands for “United Space Ship”—indicating (without troublesome specifics) that mankind has found some unity on Earth, perhaps at long last even peace. If you require a statement such as one that Earth cities of the future are splendidly planned with fifty-mile parkland strips around them, fine. But television today simply will not let us get into details of Earth’s politics of Star Trek’s century; for example, which socio-economic system ultimately worked out best.

Contrast the ideological tension in The Original Series with the relaxed setting described in the bible for The Next Generation, twenty years later. Discussing the exact same question of Earth’s society in the Star Trek universe, Roddenberry states:

We have established that most (if not all) of the major problems facing the human species have been resolved and the Earth has since been transformed into a human paradise, with large protected wilderness areas, grand parks, beautiful cities, and a literate and compassionate population that has learned to appreciate life as a grand adventure.