What if the govt replaced dollars with CBDCs, but for some reason (perhaps ineptitude of govt devs) you could only use CBDCs to buy and sell things that begin with the letters A, B or C.
Want to buy an apple or a car? No problem. Want to buy a house? Sorry. Houses start with H, and money doesn't work for that anymore. Best we can do is an apartment. But even then the apartment wouldn’t have windows, because you can’t make money producing windows (or glass).
It’s not that it’s impossible to produce things that don’t start with A, B and C, it’s just extremely cumbersome. You’d need to find a company willing to produce these things and barter for them, using artwork, bananas, canned tuna, and so on. So you still see people creating TVs, umbrellas, and things starting with other letters, but they’re doing it mostly as a hobby; they don’t expect to make any money from them. Very quickly all industrial production switches to the ABC economy, after all other industries go bankrupt.
You’d think that people would be enraged that 90% of all their goods and services no longer had value in the market, right? Perhaps. But initially the government said that a fix is in the works and that it’s a very complicated problem with all the top minds working on it. Later, the government explained that this is an inherent problem with CBDCs and nothing can be done about it. And after some time, with no fix, the situation became normalized.
Children were born into a world where all they knew is that markets only work for products starting with the first 3 letters. The idea that you could buy ice cream or shoes without businesses getting a special government grant to produce these became laughable. All non-ABC products became so rare that no one expected the average person could buy them even if they wanted to.
This sounds like an absurd scenario, no? Well, it’s actually not that different from the world we live in today. In our world markets only work for scarce products and services. They don’t work for non-scarce goods like open source software, discoveries in fundamental physics or other public goods. And that is despite the incredible value of these goods to society.
If we compare all the things that have an impact on humanity (but virtually no exchange value in the market) to the things that do have value in the market, we may actually discover that our economy is more absurd than the ABC economy.
And yet we don’t even realize this absurdity in our daily life. We uncritically accept the notion that monetary value comes from scarcity – if not from real scarcity then at least from artificial scarcity. We also look at all the common and public goods around us today and don’t realize that they’re in a diminished state because people don’t have the economic incentive to produce them, but if markets worked properly for abundant goods our economy would be exponentially more prosperous.
The truth is that we can have markets that work for abundant goods, we just need to upgrade how our money works – not a crazy proposition in a world with blockchain technology. The only question then is when are we going to put our top minds to fix this?
