The Basics of a Basic Income

Or: How a society might work when its members don’t need to.

This letter was writen in response to Y Combinator’s request for research on a basic income. All quotations come from that post.


Dear Y Combinator,

I’d like to offer a few thoughts related to your Request For Research on the matter of a Basic Income. I don’t work as a researcher, nor an economist, but I’ve spent a lot of time thinking about how a society would operate when its citizens are guaranteed the requirements of life as part of a novel I’ve been working on for about five years. Theory underlies every experiment, and that’s what I’d like to offer here—just some theory.

A basic income could radically transform how we orient ourselves in society, how we evaluate people and things, how we cultivate motivation. And though there might be logistic, bureaucratic, and regional complications in its administration, the changes resulting from the problems it would solve and the good it would create amount to a revolution. Y Combinator has produced companies that disrupt industries—a basic income could disrupt the entire notion of economy, or Economy.

I’m not at all qualified to lead your research project, and this letter isn’t a lame way of suggesting you select me to do so. But if you need volunteers to be subjects of this experiment, I’ll happily throw my name in the hat.

Richard Mavis

Much ado about money

A simple implementation of a basic income would involve giving people enough money to cover the costs of the necessities of life.

Before forming hypotheses or designing experiments, we should develop a robust understanding of the intentions of a basic income and of the components of its implementation.

The function of money

The most basic function of money is to abstract trade. Someone working for an hourly wage experiences this truth more directly than others—say for one hour of work they receive $20: they can then exchange $10 for a sandwich and a soda and $10 for a couple games on their phone, and they’ve effectively exchanged the hour before their lunch break for the things they want during that break.

Money allows us to remove the complexity and vagaries of bartering from any transaction. Anywhere in society someone can exchange money for the goods or services produced by someone else.

Notions like money being time or power are metaphors and aphorisms. In the same way that a programming language inhabits the concept space between a language and a tool, money inhabits the concept space between an artifact and a phenomenon. Money only has value to those that value money. Money only has value if one can exchange it for other things. Money is valued more highly when it is understood that there is a limited amount of it in circulation.

Creation, consumption, contribution

One thing that someone’s own collection of money can measure is their contribution to society. If you subtract the expenses of their consumption—as measured by the money they give to others in exchange for goods or services—from the value of their creation—as measured by the money they receive from others as a result of selling or lending that creation—then you arrive at a figure reflecting their net contribution to society.

Of course that figure is a simplistic, reductionistic indicator of one’s contribution—one can contribute to society without ever receiving money in return (e.g., scientific discoveries, cultural ideas) and, as Paul Graham wrote in his essay on income inequality, there are a lot people who get very rich without creating value—but this figure might nonetheless be valuable to a society that values the creation of new value over the manipulations of extant value.

Social stratification

Another function of money is to create social strata. Social animals of all types stratify socially according to characteristics they value. Humans often stratify according to collections of money.

So the accumulation of money can become our most basic motivator. And when a society’s primary motivator is money, it follows that the one with the most money will be appraised the highest. One fault of this method of appraisal is that one’s value is based solely on their possession of money—the method of accumulation is irrelevant. A startup founder who earned $10 million is worth less than a thief who stole $20 million, a pioneer of sustainable energy technology is worth less than an oil magnate, and Vincent vah Gogh was worthless.

The basics of a basic income


Risks and rewards

Happiness and productivity

Beyond money

All of the weaknesses, points of contention, and potential problems with a basic income result from the fact that it relies on money. But it’s not difficult to image an intra-societal system of production, contribution, consumption, and exchange that combines the poverty-eliminating, risk-minimizing, labor-liberating potential of a basic income with the socially-stratifying, ambition-encouraging, achievement-rewarding aspects of capitalism. The elements are already in place: credit cards, fiat-based currency, peer review panels, inventory tracking systems, the internet. It’s easy to imagine technological advances and social policies that both remove the need for work and foster the desire to work, and that both remove the need for money and enable the creation of greater abundance and value than history has ever know.