Radical Markets ← We Can Solve This

We share with the Left the idea that existing social arrangements generate unfair inequality and undermine collective action. But the Left’s flaw has been its reliance on the discretionary power of government bureaucratic elites to fix social ills.

He might wake from a nap in the middle of research workshops to comment, “This paper would benefit from … Henry George’s principle of taxing land values.” He mentioned George’s scheme so often that a colleague who was eulogizing him quipped,

The ideas of economists and political philosophers, both when they are right and when they are wrong, are more powerful than is commonly understood. Indeed the world is ruled by little else. Practical men, who believe themselves to be quite exempt from any intellectual influence, are usually the slaves of some defunct economist. —JOHN MAYNARD KEYNES,

but authoritarianism is hardly an appealing substitute. Globalization and international governance institutions have become favorite scapegoats, yet no other sustainable path for international relations has been proposed.

Right-wing populist movements appeal to historically dominant population groups that have been left behind economically relative to their expectations:

The movements offer little in terms of realistic policy proposals that would benefit their members as well as the general public; they are protesting against the failures of existing political systems rather than acting as a positive force.20 The rise of these movements, then, reflects a failure of democratic institutions to advance the public interest and resolve conflicts between different social groups.

Attempts to resolve these issues often end up in the hands of the judicial system. But judges are members of the elite and tend to be out of touch with what life is like for many ordinary citizens. Their decisions often inflame rather than settle cultural disputes.

Smith saw markets as settings where “It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own interest.”

Religion served to constrain such deviance at every turn. The virtuous were farmers, craftsmen, soldiers, and valiant aristocratic warriors, who followed an age-old way of life for its own sake or to please God. Merchants, financiers, and others who amassed wealth from “commerce” were regarded with suspicion well into the nineteenth century.

In a free market, individuals may purchase any goods they want as long as they pay a price sufficient to compensate sellers for the loss of those goods. They also must receive from others for work they do or products they offer just the value that these services create for other citizens. Such a market gives every individual the maximum freedom consistent with not infringing on the freedom of others.

“The only purpose for which power can be rightfully exercised over any member of a civilized community, against his will, is to prevent harm to others.”

In a competitive market, individuals must take as a given the prices they pay and get paid. They have no ability to manipulate prices by exercising what economists call “market power.” Uncompetitive markets turn self-interest from a productive engine into a destructive scourge by allowing individuals or groups to obstruct trade and reduce production to shift prices in their favor.

In an open market, all people, regardless of nationality, gender identity, color, or creed, are allowed to participate in the process of market exchange, maximizing the opportunity for mutual benefits. Markets that are closed reduce the opportunity for exchange and unfairly cut some people off from the benefits of these exchanges.

Open markets embody the idea that by cooperating as broadly as possible, we can all benefit from one another.

“The rich … are led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants; and thus, without intending it, without knowing it, advance the interest of the society.”

The Radicals complained that the aristocracy controlled the government, causing it to protect the aristocracy’s monopolies by restricting markets and closing borders to trade. They understood that economic privilege and political privilege were two sides of the same coin and thus fought with equal vigor for competitive democratic elections through the expansion of the franchise and for open borders to international trade.

Economists came to believe that differences in individuals’ natural talents are the main source of inequality. They agreed that progressive taxation and welfare systems are needed to ensure a fair distribution, but that they must be limited lest they come at a cost to the size of the total economic pie.

While some commentators believe that stagnequality is the result of broad economic and demographic forces that are beyond people’s control, we believe that it is the result of a failure of ideas.

The ideological and military victories of World War II and the Cold War, accompanied by economic and political achievements of the second half of the twentieth century, thus bred arrogance, which led to complacency and internal division. The radical reformers of the nineteenth and early twentieth centuries became the squabbling technocrats of today.

Most markets in which individuals and businesses participate are more like the housing market than the grain market.

that, at the same time that some markets are clogged with market power, many areas of human life are lacking in markets that could vastly improve people’s well-being. This problem is most acute for goods and services usually provided by governments, like policing, public parks, roads, social insurance, and national defense: what is needed is a market for political influence.

there is no way for them to exert influence in proportion to the importance of that issue for them. One-person-one-vote stops compromise among groups of people and leads to wild swings of power between ideological blocs.

Our supposedly perfectly competitive market economy, so it would seem, is actually plagued by monopolized and missing markets.

“Some constituencies, such as private landowners … could see holding this up for quite some time.”1 There is an obvious incentive for a landowner to hold out for a high price when such a valuable project is coming through.

When improvements in navigation made long-distance trade cheaper, it became more efficient for the community to specialize in one commodity (say, wheat or textiles) while buying the goods it needed from other communities.

Because of the ubiquity of private property in our economy, empirical research suggests that the misallocation of resources due to monopoly and related problems we discuss below may be reducing output by 25% or more annually—trillions of dollars per year in the United States alone.

Taxing away all such “land rent” would mean that while owners could enjoy the full value of anything they built on the land, they would have to pay to the government any value of the land itself, just as someone who leased the land would. “Land monopolization would no longer pay. Millions of acres, where others are now shut out by high prices, would be abandoned or sold at trivial prices.”

If the government imposes a tax on ownership of land, then people who can use their land productively will do so and be able to pay the tax, while those who would otherwise be happy to let it sit vacant will sell the land in order to avoid the tax.

Otherwise there is no way for bargaining to overcome the monopoly problem and ensure that assets consistently flow to their best (highest-value) users. This work helped explain why spectrum markets had so stubbornly failed to reallocate spectrum to new uses and why auctions for Internet advertising slots worked so much better. Only a true, continuous auction in uses can solve the monopoly problem and hence produce allocative efficiency.

Like George’s tax proposal, the Vickrey Commons does not give people good investment incentives.

How did the Athenians determine which citizens were the wealthiest? According to Demosthenes, any member of the liturgical class could challenge any other citizen he believed was wealthier to antidosis or “exchange.”36 The person being challenged would have to either assume the liturgical responsibility or exchange all possessions with the challenger

If taxes are to be levied … on … the value of … properties … it is important that assessment procedures be adopted which estimate the true economic value…. The economist’s answer … is simple and essentially fool-proof: allow each … owner … to declare the value of his own property, make the declared values … public, and require that an owner sell his property to any bidder … willing to pay … the declared value. This system is simple, self-enforcing, allows no scope for corruption, has negligible cost of administration, and creates incentives, in addition to those already present in the market, for each property to be put to that use in which it has the highest economic productivity.

Harberger’s tax, later also proposed by the Nobel Prize–winning economist Maurice Allais, makes it costly to declare a high valuation and thus deter the purchase of assets. Therefore, it penalizes any attempt to exercise monopoly power over an asset.42 The higher the price the possessor demands, the more tax she must pay.

When the tax is reduced incrementally to improve investment efficiency, the loss in allocative efficiency is less than the gain in investment efficiency. The reason is that the most valuable sales are ones where the buyer is willing to pay significantly more than the seller is willing to accept.

Because of this quadratic structure, it is always optimal to have at least a very small tax. For example, a 1% tax will hardly distort investment at all but can still significantly improve allocative incentives. The owner will self-assess with reasonable accuracy to minimize her tax bill, but she will not be deterred from making valuable investments in the property. It is typically optimal to set a moderate tax rate, below turnover rate, that balances these two forces.

We can conceptualize a COST as sharing ownership between society and the possessor. Possessors become lessees from society. Their lease terminates when a higher-value user appears, whereupon the lease is automatically transferred to that user.

Enormous resources have been spent by governments to help low-income people borrow to buy homes, in many cases saddling them with debt that they cannot repay.

Because possessors anticipate the taxes they will pay in the future, the price they will set on an asset will fall dramatically, as it would be discounted by the amount of the future COST payments.

Economists tend to neglect three other impediments to trade: laziness, incompetence, and malice.

The buying and selling of houses is so stressful that most people hire real estate agents and lawyers, who often overcharge them. These and many other hassles would be avoided with a COST, a transparent, liquid, low-capital system of asset exchange.

A COST would be useful for handling many other public assets. For example, ranchers lease grazing rights from the government, which often doesn’t know how to price those rights. A COST, in which ranchers would effectively “buy” grazing rights from one another at self-assessed prices, would work more smoothly. A COST could also be used for leases on mineral, fishery, farming, and other natural resource leases, which are frequently sold off at arbitrary prices.

The most persistent distributive conflict in capitalist economies arises from the concentration of wealth. Because most of the returns to capital flow to the very wealthy, a broad distinction exists between those who live primarily off the returns to capital and those who live off their labor. A COST would make most of the return to capital flow to the public, making it more equally distributed than wages.

With a COST, if you want to minimize the risk of loss through a forced sale, you can easily do so—by setting a high price. This means that people must pay a tax on things in proportion to how much they value them.

The COST could also make us think about property in a different and healthier way.

supported by some research.70 A world in which everyone benefits from the prosperity of others

A world in which everyone benefits from the prosperity of others

Wealth is rarely created solely by the actions of the people who are paid for it under capitalism. They normally benefit from the help of friends, colleagues, neighbors, teachers, and many other people who are not fully compensated for their contributions. A COST would better proportion the distribution of wealth to the labor that created it.

The COST would create a Radical Market in property, one that emphasized use over ownership.

After the votes were tallied, the country was shocked to find that despite 75% of voters opposing the initiative, it won an overwhelming victory with 60% of votes cast. The average opponent had cast 1.5 votes against it, but the average supporter of personal hunting rifle ownership cast a stunning 6.75 votes.

Events like these made many Greek thinkers deeply skeptical of democracy. They were concerned about the shifting passions of the mob and its susceptibility to demagogic leadership, as well as the disruptive power of the poor, who were in the majority, to redistribute wealth from the rich to themselves.

The members of all these bodies were selected by lot. This new system required multiple majority votes involving different groups of people, which amounted to needing a supermajority to get anything done. Thus began a long tradition of attempts by democratic governments to limit majority rule.

Anglo-Saxon kings sought advice from lords about the state of their realm and convened the king’s advisory council, called the witan, to receive reports, a practice that eventually evolved into a parliament.

liberal thinkers were united in rejecting monarchical privilege in favor of placing authority in the hands of the people, but they struggled to explain how the people should wield their power. Democracy, yes, but what does democracy mean? And how to avoid the self-destructive and chaotic effects of mob rule they knew from classical history?

Those with the most intense preferences who are repeatedly victimized in the political process have strong incentives to rebel or secede.

judicially enforced rights rely heavily on the benevolence, wisdom, and legitimacy of a respected elite. Federal judges are unelected and unaccountable to the public: this is what enabled them to advance minority rights in the first place, but it also put them in a precarious position in a country with strong democratic norms.

The problem is that Antoine, Belle, and Charles cannot vote based on how intensely they care about the different proposals. The voting system is a straitjacket that throws out information. A vote can tell you only whether a person prefers one outcome to another,

It would appear hopelessly ambiguous who should win. The problem is that Antoine, Belle, and Charles cannot vote based on how intensely they care about the different proposals. The voting system is a straitjacket that throws out information. A vote can tell you only whether a person prefers one outcome to another, but not how much that person prefers the outcome.

The most alarming example, however, was the rise of the Nazis. In his book The Coming of the Third Reich, historian Richard Evans observes that no more than 10% of the German public ever were strong supporters of the extreme right.21 Yet in the 1930 election, Adolf Hitler won an additional 10% from people who cast protest votes against a political system that they saw as corrupt and unresponsive to their needs, catapulting the Nazi party to a leading position as the major right-of-center party in the German parliament

At the same time, fear of Hitler led many Jews, minorities, workers, and leftists to vote for the Communists, further reinforcing the middle-class fear that if Hitler lost, Communists would prevail. This downward spiral of mutual fear, violence, and mistrust ushered in Nazi dictatorship the next year.

At each stage, Hitler enjoyed effective majority support from those remaining within the polity, so in some sense each purge was “democratic” even as it undermined the universalistic basis of democracy.

Failures to protect minority rights, the tyranny of the majority, paradoxical victories for bad candidates, repeated use of majority rule to establish dictatorship, and the tendency of democracy to ignore the views of the very knowledgeable: all reflected the inability of democracy to give consideration to the intensity of people’s needs and interests, and to the superior wisdom or expertise of certain voters.

There is a better way to allocate resources to people with stronger needs and interests, and reward those who demonstrate special talents or insight—markets.

William Vickrey. He realized that the problem with applying the principle of an auction to politics lay not in the auction itself but in the way that principle had been misinterpreted.

The idea behind an auction, Vickrey realized, is not allocating the good to the highest bidder. Instead it is that each individual must pay an amount equal to the cost that her actions impose on others.

In the case of collective decisions, people affected by the possible public good should have the right to vote as much as they wish, but everyone should have to pay the cost that her votes impose on others.

in voting, you should have to pay for the harm you impose on people by outvoting them in referenda (or other types of elections) in which a collective decision is made. The amount you pay equals the amount by which your vote denies your fellow citizens the value they would obtain from the different outcome they would prefer.

The question, then, is how much people care about pollution. To answer this, the government could hold a referendum that asks people to vote on a tolerable level of pollution. Yet this idea suffers from the tyranny of the majority. The problem is that most people might not care much about pollution, and their vote will carry the day, but there will be others, probably in a minority, who care a great deal.

Another way to look at this is that, as Nils seeks larger reductions in pollution, his demands become costlier to others in two different ways. First, he is seeking a larger reduction in pollution, which straightforwardly harms others by preventing them from consuming electricity for which they would be willing to pay the cost (to everyone other than Nils). But, second, he is requesting the elimination of increasingly beneficial pollution-generating economic activity.

We have described a highly idealized way in which the town could make a collective decision that aggregates the well-being of all rather than allowing a majority to dictate outcomes that benefit it at the expense of others. But can people actually provide such complex cost schedules?

This system enables people to cast votes that reflect the strength of their preferences. The key defect of the current system—that one can effectively register only three preferences: yes, no, indifferent—is eliminated. This makes two important things possible. First, a passionate minority can outvote an indifferent majority, solving the problem of the tyranny of the majority. Second, the outcome of the vote should maximize the well-being of the entire group, not the well

Recall that the problem with a standard pricing model of public goods, where influence is based on a one-to-one relationship with how much you pay, is that those who care most about an issue want to buy all the votes, while those who care only a little buy none. The problem is that votes are too cheap for those who care a lot, but too expensive for those who care little. The way to solve this is to make the next vote more expensive to those who have already bought many votes than it is to those buying their first vote.

If, all else being equal, Kentaro values being able to change the outcome in his favor twice as much as his neighbor Meiko would value changing it in her favor (against gun rights), Kentaro will pay twice as much at the margin as Meiko does.

QV achieves a perfect balance between the free-rider and the tyranny of the majority problems. If the cost of voting increased more steeply, say, as the fourth power of votes cast, those with strong preferences would vote too little and we would revert to a partial tyranny of the majority. If the cost of voting increased more slowly, those with intense preferences would have too much say, as a partial free-rider problem would prevail.

under QV, the communities can determine which group of people—the supporters or opponents—is willing to give up more total voice for the project even though it does not know how much any individual (or the group) values the project.

Crucially, QV gives weight both to numbers and to the intensity of interests. A large group of people with weak preferences might outvote a very small group of people with intense preferences but not a somewhat larger group of people with intense preferences.

If a respondent truly cares about only one issue (which is very unlikely), she will spend her entire budget to buy relatively few votes to take a position on one issue. If she cares about many issues, she must decide how to allocate her votes across them. She may discover, for example, that while she cares a lot about abortion rights, she doesn’t want to use up so many credits to vote in favor of them that she can’t even buy one vote in order to take a position on the Affordable Health Care Act of 2010 or the minimum wage.

Typically, respondents (especially those with less formal training in mathematics) quickly run into a constraint, running out of credits, and then returning to correct course. Economist Sendhil Mullainathan and psychologist Eldar Shafir have shown in their 2013 book that running into this type of “scarcity” quickly focuses the minds of participants so that they complete the survey carefully.

With QV, users could have voice credits that they receive for participation (say, a certain number for every stay, ride, or post) that they then could use to evaluate the performance of others on the system. The cost of votes pro and con would grow quadratically and participants could save their credits for future interactions or use saved credits for those about which they feel more strongly at present. Such a system combines the best of both tipping and rating, creating a real cost to expressing enthusiasm, but also discouraging free-riding and allowing other participants to benefit from the feedback.

Book groups, warrior guilds in massive multiplayer online video games, unions, clubs, friends choosing a restaurant, start-ups hiring new workers, academic funders allocating grants, crowds funding new products, citizens funding campaigns, and colleagues scheduling a meeting: all must frequently make collective decisions that bind all members.

An inconvenient but all too common solution to the agony of arguing with one’s fellow co-op members over whether to repair the building’s roof this year or next year is to own one’s own house.

Recall that in many 1p1v systems, voters can find themselves in the position of having to vote for the lesser of two evils, leading to the possibility of a candidate everyone dislikes winning based on a cycle of fear of other leading candidates.

The total cost in voice credits would be the sum of the squares of all votes on individual candidates: the quadratic cost kicks in at the candidate, not the election, level.

Recall that the driving force behind it is that voters feel compelled to vote for one of the two leading candidates to avoid “wasting” their votes. We propose a system in which votes could be cast either in favor of or against candidates, and one could vote for (or against) as many candidates as one wishes. As a result of the quadratic pricing, it is cheaper to divide one’s credits between votes for a favored candidate and votes against his or her opponent(s), than to spend credits only on the favored candidate

beyond this specific result, this logic suggests that QV is not limited to binary referenda, or continuous public goods decisions. For almost any collective decision problem, there is some form of QV that achieves the socially optimal outcome. As such, QV offers a coherent basis for a complete democratic system.

QV could be applied to a representative body itself. Every legislator would receive a certain number of voice credits upon election and could allocate them across the issues most important to her constituents. Representative institutions face the same problem of preference aggregation that exists in the referendum-style votes.

A particular bill will affect those groups in different ways—some greatly, others hardly at all. This means that representatives who seek reelection will also vary in their interests in passage of the bill.

The Emergency Economic Stabilization Act of 2008, which was needed to address the financial crisis, was initially blocked in the US House of Representatives. Leaders were able to pass the bill only after arranging for a range of payoffs, including a reduction in the depreciation schedule for improvements to restaurant buildings; extension of tax credits for solar energy installations; and tax exemptions or subsidies for a number of entities such as film and television producers, rum producers in Puerto Rico and the Virgin Islands, racetrack facilities, and manufacturers of wool products and toy wooden arrows. Yet for each ugly “success story” such as this, there is a corrupt bargain that harms the country and causes years of gridlock.

It would allow citizens to focus their voting on topics of their true passion and knowledge, rather than force them to vote on issues on which they feel ill-informed and thus liable to conform to stereotypes and party identification. Because QV penalizes

QV penalizes extreme views by making them costlier to express, it encourages moderation and compromise. By offering broader freedom, subject to a budget constraint, it gives citizens greater responsibility and control over collective decisions.

Because citizens tend to resent and feel coerced by rationing in planned economies, they experience the abandonment of planning as a blossoming of freedom, as was so clear with the collapse of communism in the 1980s and 1990s. When people have the freedom to choose what to spend their money on, they are afforded a sense of dignity and responsibility for the things they have and choose to forgo. A political culture based on such a market mentality could give people a stronger sense of dignity and responsibility in politics.

In such large-scale, connected societies, it is usually easier to provide benefits to many people as a group than to individuals separately. Information is easily shared by many; applications for social interaction have little value if used only by a few; public transport shared by many is often more economical than use of individual vehicles. Yet such large-scale services at present are either provided by monopolistic corporations or by dysfunctional public authorities. Fear of the failures of these providers often leads us to wastefully retreat from public life behind the walls of our homes, our gated communities, our private servers, and our individual cars.

Long-distance movements of goods and tools have been a feature of human civilization since the beginning of agriculture

“We must not confuse globalization with ‘internationalism.’ … One thing is the free movement of peoples, the other of money. This can be seen … [at] the border between Mexico and the United States which hardly exists as far as the flow of money and goods is concerned. Yet it stands as a kind of Berlin Wall … when it comes to stopping people from getting across.”

It is thus natural that trade and migration should both benefit capitalists in wealthy countries and laborers in poor countries at the expense of laborers in wealthy countries and capitalists in poor countries.

There is significant evidence that immigration reduces the wages of native workers whose backgrounds are similar to those of migrants. For example, illegal immigration to the United States from Mexico and Central America tends to hurt native workers with low education and weak language skills.

Systems that put employers in charge seem to work better than points-based systems but, as we have noted, allocate gains mostly to employers. An auction-based system avoids both of these pitfalls.

Issues such as the competence problem show up in virtually every aspect of market economies. People must manage their pensions, mortgages, credit cards, job searches, and other complex economic relationships. Dozens of institutions have emerged to help individuals navigate these obstacles. Some individuals educate themselves to become experts; others draw on markets for personal services or assistants; others use online platforms that spring up to help with screening. In the worst case, some people will abstain from participating as sponsors. But we suspect most

One might worry that Google will try to take advantage of our program by encouraging its employees and others to sponsor programmers and contract them to Google. But now, serving as middlemen, sponsors would obtain a cut of the profits. If Anthony hears that Google’s Akron office needs programmers, he can look for programmers. Anthony will still gain from the sponsorship, as will the migrant worker and the local economy.

it is crucial to recognize that such migration would not create inequality (in fact it would reduce it). It would merely make more visible the inequality that is currently obscured by national borders. To the extent this occurs, we believe it would largely be a salutary effect as it would begin to expose and soften a global system that keeps extreme poverty out of sight and mind for the people of wealthy countries.

we need to acknowledge that we in the United States already have a subordinate class of low-wage workers—they are illegal aliens. Americans have exploited this class for decades, and it has for those decades been tolerated by the US government because of its importance for many industries.

most people living in wealthy cities who consider themselves sympathetic to the plight of migrants know little or nothing of the language, cultures, aspirations, and values of those they claim to sympathize with. They benefit greatly from the cheap services these migrants offer and rarely concern themselves with the poverty in which they live. The solidarity of such cosmopolitan elites is thus skin deep. But it is better than the open hostility many ordinary citizens of wealthy countries feel toward migrants.

Beginning in the 1970s and accelerating from the 1980s onward, antitrust authorities lost track of the ways in which capital markets reconfigured themselves to maintain monopoly power.

A recent study shows a strong decline in relative compensation with common ownership: more commonly owned firms have compensation practices that systematically discourage aggressive competition.

Perhaps it is a coincidence, but over precisely the same period that institutional investors rose to prominence, the dominant corporate “ideology” shifted away from one emphasizing investment and innovation and toward one favoring retrenchment, lobbying, and cost-cutting.30 Such initiatives may result in lower competition and thus higher profits for institutional investors.

A simple but radical reform can prevent this dystopia: ban institutional investors from diversifying their holdings within industries while allowing them to diversify across industries. BlackRock would own as much as it wants of (say) United Airlines, but it would own no stake in Delta, Southwest, and the others.

Our approach can be stated as a simple rule: No investor holding shares of more than a single effective firm in an oligopoly and participating in corporate governance may own more than 1% of the market.

First, while they are likely illegal, these activities have been tolerated for years and it seems capricious and unfair to bankrupt all institutional investors for behavior that is so standard to the industry, however egregious its harms.

To prevent this dampening of innovation and competition, antitrust authorities must learn to think more like entrepreneurs and venture capitalists, seeing possibilities beyond existing market structures to the potential markets and technologies of the future, even if these are highly uncertain.

To misquote another Radical, eternal vigilance is the price of market competition.58

until you are advanced enough to grasp calculus, studying math will do little or nothing to advance your understanding of calculus; it will seem impossibly complex. And once you know calculus passably well, additional study will quickly become wasted and redundant. Yet for a critical period, the study is extremely valuable in learning calculus.

overall evidence on the labor market returns to education suggests that the value of additional years of schooling does not trail off very quickly: advanced degrees often boost earning power by more over what someone with a basic education earns than a basic education does over none.

This arrangement is far from optimal. Users who have exceptional skills or knowledge, but who are not enthusiastic about using social media, stay away and deny the value of their contributions to online social life and ML systems.

Once people awaken to their role as data laborers—obtain a “class consciousness,” if you will—organizations (sort of like unions) may emerge to supply data laborers with the means to engage in collective action. Imagine, for example, a data labor union that solicited members—the data laborers—by promising them higher payments for their data. Once the union obtained a critical mass, it could approach Facebook or Google and threaten a “strike” (also, effectively, a boycott because data laborers are simultaneously consumers of Facebook’s and Google’s services). The technical details would be complex, but we can imagine a range of possible approaches.

Beyond the direct income implications, paying people for data may also change the social understanding of the digital economy. Rather than feeling like passive consumers of Internet services, users might see themselves as active producers and participants in the creation of value.

We suspect that the term AI would gradually give way to a more accurate understanding of the sources of value in digital systems such as “collective intelligence.” Users would treat the useful insights of Siri and Alexa not as advice from robots, but as assemblages of human contributions, in the way they understand an encyclopedia or the insights on their Facebook wall.

It would be a mistake, however, to think that the current system is not coercive. In our current system, there is a wide gulf between educated elites whose native or acquired talents are highly marketable and those who have been left behind by changes sweeping the economy. The talented enjoy a kind of freedom, as they can select from among a variety of appealing jobs. These jobs allow them to quickly accumulate capital that they can depend on as they age, if they do not like the jobs that are available, or pick and choose among different levels of labor (part-time, enjoyable or rewarding but low-paying jobs in the nonprofit sector, etc.). Those with fewer marketable skills are given a stark choice: undergo harsh labor conditions for low pay, starve, or submit to the many indignities of life on welfare. Yet the waste of social resources when a talented person fails to realize her potential is far greater, and arguably their failure to work should be punished more harshly.

This raises the possibility that QV voice credits could be a common currency that countries use to trade influence across different legal regimes—trade, investment, migration, the environment, and so on. Imagine, for example, that countries are given credits in proportion to some combination of their wealth, population, and military power. That means, of course, that large, wealthy, powerful countries would exert more influence over international relations than other countries do, but that’s just the way things are—currently and in the foreseeable future—and we need to ground our proposal in a realistic assessment as to the way things are. QV would not directly eliminate these power asymmetries (though our other proposals might help mitigate them), but it would make it easier for countries to cooperate across issue areas where cooperative gains are possible.

One of the virtues of QV is that it breaks down the “vote” into a system of continuous voice, allowing participants to exert influence to a greater or lesser degree. Resident aliens could receive a small number of credits in order to give them marginal rather than decisive influence wherever they reside.

Capitalism undermined the social and political divisions that prevailed earlier in history, but has thrown up new ones, based largely on wealth. Radical Markets would take the next step, and help break down privileges based on wealth and economic advantage as well.

Our proposals are grounded in economic theory and the history of ideas, but human nature has a way of defeating the best thought-out schemes, both through stubbornness and through its occasionally extreme malleability. It is notoriously difficult to predict when human cultural adaptation to new social institutions will undermine or support those institutions, or turn utopian designs into dystopias.

Any new and radical proposal will be greeted by skepticism, even scorn. Yet all of the institutions that we take for granted today—the free market, democracy, the rule of law—were at one time radical proposals.

If we aspire to prosperity and progress, we must be willing to question old truths, to get at the root of the matter, and to experiment with new ideas. This is what we have tried to do.

In the popular imagination, central planning could not succeed because it failed to provide individuals the incentive to work. People needed the prospect of riches, or at least wages, to get them out of bed in the morning. Yet incentives were quite strong in the Soviet Union, stronger, in many ways, than they are in capitalist countries. While there was less chance under Communism to grow rich, any prisoner of the Gulag knew the fate of those who “malingered