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Fix the economy
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Adaptive Economic Operating System

A feedback-controlled market economy designed around human wellbeing, productive freedom, circular resource use and measurable public value.

Solution section

Materials, Energy and Products

Explicit material stocks and a product characteristic vector underneath the monetary transaction.

Materials, energy and products

Underneath the monetary economy sits a physical one, and a monetary transaction alone does not reveal which physical trajectory occurred. £500 spent on a washing machine could correspond to a product built mostly from virgin material that lasts five years and is difficult to repair, or one built mostly from recycled material that lasts twenty years and is easily repaired. Those trajectories have very different consequences for resource extraction, energy use, waste, employment and resilience — and the price alone does not distinguish them.

This proposal represents material stocks explicitly. For material m:

Mm,t+1stock=Mm,tstock+Em,t+Rm,t−Cm,t−Wm,t,M_{m,t+1}^{stock} = M_{m,t}^{stock} + E_{m,t} + R_{m,t} - C_{m,t} - W_{m,t},

where E is virgin material entering the economy, R is recovered material re-entering productive use, C is material incorporated into products and productive capital, and W is material leaving useful circulation as waste. The economy therefore has physical stocks and flows running alongside its financial ones: materials circulate, energy flows, products are made, used, degraded and either recovered or lost.

Each product p can carry an explicit characteristic vector:

zp=[VpEpWpLpReppRecpToxpDp]\mathbf{z}_p = \begin{bmatrix} V_p \\ E_p \\ W_p \\ L_p \\ Rep_p \\ Rec_p \\ Tox_p \\ D_p \end{bmatrix}

— virgin-material requirement, embodied energy/emissions, expected unrecoverable waste, expected lifetime, repairability, recyclability, toxicity and durability. This vector is what later sections (Digital Product Identities, Physical-Outcome Taxation) attach economic signals to. Two products with identical prices can occupy very different points in this space; today's tax and information systems mostly cannot tell.