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1. The paradox of Philanthropy in a zero-sum economy

One of the more "rewarding" activities that billionaires have is charity. Whether they write cheques for charity work, or create institutions that perform charity work in their name, charity is often associated with the end-game of personal wealth accumulation: One reaches the stage where he has so much money that he is virtually insured that it will simply never run out for several generations - no matter how much one spends for their lifestyle.

Thus one can afford to spend time and money, being generous to others. This can be an act done from the heart - or for less pure purposes, like PR / public image improvement - which is more often the case.

While billionaires typically have to part with a very small percentage of their money for charity work, this same money can "buy" them various high-society awards that the Elite like to give among themselves, a moral high ground for their good deeds, titles like "great Philanthropist", etc etc.

It is interesting to note that the portfolio of a billionaire might be fluctuating daily by amounts ranging from 7 to 10 digits due to daily market volatility, yet even a few million dollars can make a difference for everyday matters involving poor people.

There is a paradox though: The world economy operates with a fixed amount of resources, so, by necessity, it has a "pie-chart" distribution for the existing wealth. If, say, 1000 people have 90% of all the wealth, then 7 billion people have to live with the 10% of the remaining wealth (whether it's monetary assets, property, shares, etc).

In that sense, the very act of hoarding in the rich-end of the spectrum, indirectly creates conditions of poverty in the poor-end of the spectrum. So, billionaires, by their very existence, act in an anti-charitable manner by indirectly "depriving" resources from the poor. From that perspective, their recognition as a positive force among the poor seems ludicrous and hence the paradox.

2. Morality in a system of limited resources

This is one of the reasons why socialism has an appeal in the lower-end of the economic spectrum: Poor people understand that concentration of wealth in a few implies poverty for the many - and thus people "buy" the solution of wealth redistribution as a "fix".

The rich capitalist rationale also has an appeal: Can somebody be blamed here for the reality of limited resources? Was the rich person doing something morally wrong, by playing with the rules of the game, and making himself rich? Is it his fault that he was highly successful and became rich - something that others could do too if they tried and succeeded? Isn't it true that the rich person has no obligation to give anything to anyone? So isn't that better than not giving anything?

The poor socialist counterarguments would be like: "Yes, but why should we thank the rich for our impoverishment? If they have acquired all the money then should we thank them for giving us peanuts - all the while increasing their collective accumulation against the lower classes?"

So both camps can be right, from a certain perspective, which also allows for the preservation of both ideologies. If there was no moral ground in an ideology, in order to attract people who are aligned with it, a system would not really endure.

The morals are difficult to disentangle here. Reaping the rewards of your work and success is considered right. Giving charity (especially when you have no obligation to do so) is also something which can't be "condemned" as bad. Yet if you accumulate too much wealth, this is wealth that someone else will not have. So, by making yourself rich, you inadvertently impoverish someone else. But what are you going to do? Not get rich, or give your money away? It's a difficult subject but in the end of the day, the equation remains: Money, property and other financial resources and assets are like oxygen. If someone has all the oxygen in a room, the rest will suffocate.

Which brings us to the next point...

3. Zero-sum economic systems vs non-zero sum

Humanity has been using a zero-sum, monopoly-type, "game" for its economic model, where increased wealth accumulation increases the pace for total domination in all asset classes.

Just like in the Monopoly game, one's first money buys them a square, then they get "rent" income, then they buy a second square, then a third, etc, etc, until one ends up with all the squares (which produce income every time another player sets his foot on these squares) - having made everyone else bankrupt in the process. The one who does the more aggressive accumulation ends up owning everything and bankrupting the others. The economy works in pretty much the same way - but it has a far larger number of players.

What humanity needs is an upgrade of its economic system. An economic system based on a new paradigm that doesn't necessitate that if one person has 1, then another person has 0.

The digital world offered a peak of this reality, through the model of zero cost digital copies.

One user having one media file in their hard disk did not deprive another user from also having that media file on their own hard disk. Sharing seemed natural because replication was quite feasible. Yet the establishment quickly attacked this model, on the ground of Intellectual Property rights, by trying to fit the digital world with artificial constraints of the physical world.

Now, can this digital model inspire a monetary or economic revolution?

In a sense, that's the quadrillion dollar question...

Can we create an economic system that is not based on scarcity / a fixed-pie chart distribution, which operates on a win-win level, instead of a win-lose level?

Is it even possible to reflect real-life scarcities in such a non-scarcity based system?

On top of that, how does one solve the issue of preserving value in a non-scarce monetary system which has to compete with scarce monetary systems or commodities, without resorting to violence?

In theory, if you are a government, it is possible to force any useless currency (like paper money - backed by nothing) as a legal tender, while also banning people from transacting in other ways, thus creating an artificial environment for the adoption of a currency - but this type of force is not what I have in mind.

4. A non-zero-sum economy might be possible

While the answers to the above seem pretty elusive I have an inner confidence that, at some point, something will happen. I believe that the digital world and the quantum world are something like "hints" of how the economy will also go in the future - without these two sectors being directly connected.

The digital world lends the concept of cost-less duplicating of resources - which introduces the concept of non scarcity. The quantum world, in turn, allows the possibility where "either this or that" scenarios can become "both this and that" scenarios. Game theory also has the concept of non-zero-sum-games.

These models, if they find their way into the economy, might give us a new economic system where someone would be able to achieve economic greatness but not at the indirect expense of others. A model where one's wealth could somehow increase the total wealth but without impacting the wealth of others. A more "win-win" model ("non zero sum game") instead of a win-lose model ("zero sum game").

5. Problems and absurdities in defining wealth

While trying to think in more practical terms, of how this might be achieved at some future point of time, I stumbled upon the issue of defining wealth - which seemed to provide a very nice clue on what was being done wrong.

It was at that point where I realized that my inner conviction had a good chance of being correct - because our current understanding of wealth is distorted. For example, right now, wealth is generally calculated through scarcity, instead of abundance.

Oversupply (=abundance) brings the price of goods and services down. This creates yet another paradox, in which a starving society, where food prices are sky-high, may be richer on an excel sheet of a modern econometrist, compared to a well-fed society of abundant and very affordable food - which seems poorer on the same excel sheet.

Yet the experience of common people will refute the numbers of the econometrist.

GDP, for example, is about the transaction volume in an economy. If

100 million people buy

100 million tons of food per year

...for 100 billion USD (avg cost of food 1000$ per ton),

...then this society is considered "richer" than a society where:

100 million people buy

200 million tons of food per year

...for 50 billion USD (avg cost of food 250$ per ton).

Why? Because the economy is measured in terms of transaction volume. So having 50 billion of transacted value is "worse" than having 100 billion in trading volume of food.

This distorted measurement model, creates the wrong incentives. It promotes the overcharging for any basic need so that we can then show that the economy is thriving. We could overcharge for food, water, transportation, electricity, heck even breathable air, so that we can show that the economy is "thriving" and people are "rich" (GDP per capita) - also implying higher prosperity levels (which is false). But this scarcity and overcharging is not "riches" nor prosperity.

How did we end up here? In the ancient times, wealth was measured by one's possessions, not their money. When money was introduced, it simply became a more convenient way to "reflect" the value of possessions - but the possessions (actual wealth) was the important part for people's daily lives.

But now, money, as a concept, despite not being based on gold or silver which actually had some type of intrinsic value, seems to be more significant than the things that it is reflecting. So, when measuring an economy, this creates the paradox explained earlier: An economy in which people only afforded to consume 100mn tons of food is somehow "richer" than an economy where people afforded to consume 200mn tons of food.

If an alien came to the planet and saw 2 identical countries, with the only difference being the abundance in food, and was asked which of these two countries is richer, the Alien would quickly answer "the one with more food". But we, as a society, are currently saying the opposite: We send the "overproduction" to the landfill so that it doesn't break the artificial scarcity and create a negative effect on price. The European Union has been paying farmers to do this for decades. But is this concept of "wealth" aligned with "prosperity" (as it should) because the GDP is "higher" this way?

6. The need for a new economic system

Having recognized this type of distorted thinking and flawed econometry, which in turn points economic actors to the wrong incentives and consequent economic behaviors, I'm thinking that an entirely different system than what has ever been presented so far might not only be possible but feasible - because currently there are too many flaws in what we have as options (whether past systems, or current systems like capitalism and socialism, plus everything in-between).

The destruction of capitalism and socialism will, in my opinion inevitably occur anyway in a few decades. Capitalism is based on the model of worker-consumer, but the worker has no place in an AI production, thus the economy can't operate by expecting the worker to consume, as he'll have no money (other than government-granted money).

Socialism is based on the concept of added value that the worker adds in the manufacturing process so that raw material can be turned into a finished product. The appeal was that the factory owner was making multiple times the profit of what he was paying to the workers, while all this money could be distributed to the workers - if only they owned the factory (wealth redistribution through the state).

All these are irrelevant in terms of the direction we are heading with AI robotic workers - which even deprecates slave labor as useless... so change, has to happen in some form or another. The only question is whether the system will adopt an economic system that preserves the Elite's dominance and keeps everyone in poverty and control (government issued basic income = you have to do what we tell you, or else you starve), or the people manage to design and enforce economic systems that are more conductive to their own well-being and freedom.

The design of a new economic system that can provide an alternative to government-controlled basic-income is of great importance, because this is what will determine whether humans will be free or not from the Government "strings" and conditions (of receiving this income). While this is not a matter of urgency, it is definitely something that will have to be dealt with in the next few years.

alexgr