How (in brief) might a merit-based economy work?

Question

One of the reoccurring concepts in my worldbuilding has been the existence of a caste based meritocracy. The castes being Guardians, Engineers, Scholars, Administrators, Artisans/merchants.

While brainstorming an idea came to me: What if people in this society were not paid in cash but in some manor of redeemable acknowledgement of their contribution and value to society. Something like the whuffie, only tied to one’s societal contribution instead of to popularity as in a reputation-based economy.

It would be awarded by the state at regular intervals based upon a citizen’s performance of their duties. Aside from that I haven’t a clue how this might work, if it could work at all.

Answer 1

The Way It's Supposed To Be Working Now

We live in a society that is supposed to be a meritocracy - rewarding those who work hard with better paying jobs. The issue here is that those wo already have better-paying jobs can pay for their children to get better paying jobs from the start, without earning it through merit. The means by which we reward merit becomes the means by which merit is rewarded.

Ideally, every society should work such that those who work harder are rewarded for their hard work, but the exchange of any type of currency or thing of value throws that out of balance, because someone who stockpiles that which is valued, or 'games' the system to earn the most of those things regardless of the value of their work, is working to break the system as it is meant to function.

Arbitration

One way this could be prevented is by selecting people to arbitrate what tasks are of real value, and handing out either the means to redeem that work, or the products that are due to that work as they see fit. In smaller societies, this can work quite well as we've seen in the past with Native American societies being ruled by a Chieftan who would distribute to the tribe that which is needed.

In larger societies, it tends to fall apart. A single leader cannot organize a large society on their own, so they must appoint delegates to run smaller sections of society. They then delegate their own delegates, and so on and so forth. A single deligate who is corrupted can then spoil what is supposed to be a fair and equitable society.

Not An Economy

What about a world where we don't have an economy at all? A post-scarcity society that doesn't have to concern itself with the distribution of vital goods? Under an ideal situation, all of life's necessities would be provided for, and luxury items would be the only thing separating individuals by wealth, which could be made trivially in any case.

But as I said, this would be an ideal, and runs into many problems - how would society provide goods to everyone? How would they be distributed along a large and complex set of political boundaries? How would society ensure that no individual is bereft of their basic needs? How would luxuries be distributed? Would there even be a need for work if this distribution is perfect?

Answering these questions is the exercise of writing a utopian work of fiction, or sometimes a dystopian work of fiction if society hasn't solved these problems. We're still working on the problems ourselves, so barring technology that eliminates scarcity, that can distribute needed goods to all of humanity's individual peoples, and that does not disproportionately distribute luxury good to some while others are left wanting, we will be stuck dealing with the logistics of trying to create a merit-based society.

Answer 2

How might a Merit based Economy work?

It wouldn't.

The problem is that people cannot agree upon what warrants merit, since some people will see one approach as deserving merit and others will see something else. Look at today's businesses - even within the same role, different people get different raises, even though they are "by merit".

Worse, once you start getting into specialties, and then into the higher skill levels, fewer and fewer people know enough of the specialty at that tier to evaluate merit at all. So you get fewer people being able to dole out merit rewards until there's a clique of a very few who wield the power.

Human nature would then take hold and it'd fall into reputation economy (at best).

Answer 3

I am the government. You are an engineer. Your brother is also an engineer. You repair our first major Space station habitation, your brother repairs a nuclear reactor in a major metropolitan area. I, the government, reward your brother for saving countless lives. You are obviously quite ticked to say the least.

This is an example of why this economy wouldn't work. To make an economy like this work, you would need a few things.

• Everyone devoutly supports the government

• Universal acknowledgement of the governments' say as final

• A pre-defined scale of importance that encompasses every single possibility, no matter how remote, that defines the rewards that will be handed out for the completion of each beneficial activity

The first two are extremely closely related. You could look at North Korea as an example of how to achieve those (some North Koreans disagree, but in the end those who speak out are executed or imprisoned). You would need the final bullet to stop major conflicts like the scenario above from happening. The conflicts that would otherwise occur would, as stated in a previous answer, quickly make it into a reputation deal. The scale would contain the possible rewards for every possible action performed by individuals in each caste. This obviously makes no sense, and therefore it would fail quickly, then: Back to using money!

Answer 4

I think you need to consider exactly what you're defining here. I think you can do this, but your society will be problematic, and you'd have to embrace that.

There are three aspects. You want a

1. redeemable reward that is
2. allocated based on merit
3. as evaluated according to contribution to society

Let's consider two out of three.

1 & 2 = Capitalism

Yeah, yeah, capitalism isn't perfectly merit-based, but whatever. Roughly, what your talking about is one party evaluating someone else's contributions to private ends and rewarding accordingly.

#3 would have to be pasted on by a central authority that redistributes based on corrections for private versus social returns. But most capitalist economies do some amount of this: funding scholars and teachers and police, taxing corporations.

1 & 3 Aristocracy, Caste System, etc.

If you have redeemable rewards based on contributions to society, than your society has a strong rankings of tasks according to how much each contributes. Those who function in this system do receive some sort of pay, i.e. redeemable reward, but it is often rigidly set by norms and typically one's place is assigned by heredity.

#2 must be pasted on, and how it is done depends on what you mean by merit. If it is overall merit at some central task, you assign caste or status based performance at this task, and status determines reward. This is similar to Lilliput (as in the case of a non-sense taks) or traditional Chinese bureaucracy, as in the case of a centralized exam. If you mean merit within a task, then you create room for rank, and cash wages are based on that.

2 & 3 Utopias

I think this is what you mean, and it really gets at the heart of what is described in Utopias such as Doctorow's Down and Out in the Magic Kingdom and Edward Bellamy's Looking Backward. You see, if you picture yourself rejecting cash because that's not the idea you mean, then what you are rejecting is the full redeemability of the reward. That is what defines cash. Anything that essentially differs from cash is somehow not fully redeemable. Doctorow has Whuffie, which is not fully redeemable because you do not deplete it, but rather use it to queue up for scarce resources. Bellamy has a fully equalized ration of goods that does not depend on work, but more difficult or perilous work is compensated by shorter hours, i.e. excess leisure, which is not fully redeemable.

The trick here is not thinking about how to paste on #1, but thinking about how to handicap #1 in such a way that the reward you speak of is not effectively cash. There must be things that money cannot buy that the reward can buy, unless you strictly forbid money altogether. Someone must decide what is valued; this can be a central government, but not necessarily. Maybe society as a whole has a long-lasting tradition of valuing some castes more than others, and castes have elders who recognize extraordinary individuals within the caste?

I hope that's an interesting framework.

Answer 5

The Inca Empire had something in this direction. it was called Mit'a.

Every male hat to devote labour force to the government as part of taxes. It was also used to trade between members of the society. Something like: If you build my house I will craft you some nice statues for yours.

Answer 6

I have an idea, though this may be quite a whole lot less realistic than the above answers, owing to my overactive imagination and general rejection of reality.

But basically, what about some kind of karma-tracker? I had previously bounced this idea off a couple of my friends when we were toying with potential designs for utopias. Imagine a system where every good deed you do adds a bit to your 'Karmic bank' but every bad deed subtracts from it. How would they know when to add or subtract? I don't know, magic or something.

Then basically, you do not 'pay' for goods with karma - you earn your goods with karma. A man with high enough karma could simply take what he needed - it would not subtract from his total karma. Karma is not a currency - its a measure of you as a human being. This system would be reliant on the fact that a person with good karma would not take more than what he needed, unless only to use it for good.

However, even as we discussed this, my friends and I realized how disgustingly utopic this is, so please mess it up a little if you decide to use it.

Answer 7

I think you have to define 'merit' better.

The society we have currently uses a meritocracy, with money as a token of reward for your efforts. Now, we all know that a banker is worth more than a nurse... don't we? Or do we? A banker uses his skills to generate much wealth that increases the tax coffers of the state which can then be used to hire more nurses, whereas a single nurse just does 1 person's worth of nursing.

Is the banker therefore more meritorious within society as a whole? And is that why he gets paid significantly more than a nurse?

In any case, even if you could define merit well, you'd still use money as a form of reward for people, only their pay would be tied to their merit rather than the 'evolved' or 'developed' version of it we have today.

Answer 8

I very much appreciated the Admins and Merchants comment, in many it solves your merit based karma economy problem. Right now we have merchants and admins who determine value. Perhaps in your society you don't have A supreme person giving out merit or karma but representives people voted on to give out such. In such a society people who are considered fair and moral would be the ones you choose to give out merit or karma. The first kings would have been those who were more powerful or popular the problems came in passing their power to their children- in a merit based world you would need people to not pass power or wealth on and to have every citizen start at a zero point that is at least fairly equal.

Answer 9

Merit tokens as fiat currency.

Well, you did specify "in brief" in the question!

But fine, longer answer:

Some form of currency to exchange earned "merit" would have to happen. A black market would develop.

At that point, you're back to normal transactions, but with strange side-effects.

As an MMO programmer, one of the deeply ingrained things we learn when designing an economy is to consider our currency Sources, and Sinks.

All the Sinks in this system seem to be the merchant class: that's where the "merit tokens" get spent, so it's where they end up. Though like I said, there'll be an untaxable black market of merit tokens between other castes, in return for services rendered. Though you could pass laws taxing service provision, too, in which case, those taxes too become Sinks.

Admins are the ultimate Source, which distributes to other castes.

So the Admins & Merchants have all the power in this economy, everyone else is essentially at their mercy. Admins decide your worth, your Merit point earnings. Admins then give you those points. Admins also take the points away from merchants almost 100% in order to pay the others.

Through the black market, Merchants will become wealthy. However, Admins will become powerful, and by fudging the taxation numbers, will also become wealthy.

And I hadn't realized when I was writing this up, but this describes the fall from idealistic socialism/communism to the strongly caste-based, centralized-power-and-wealth Communism systems that we saw towards the end of the cold war. In this light, this feels inevitable, and I can't see any good methods to prevent such a slide.