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What about a society that would function the following way:

  • Someone creates an idea of a product or service and posts it on a special site in the Internet.

  • People vote for the idea indicating amounts of money they would pay for it, putting deposits.

  • A professional designer steps in and creates the design. He will be paid if the product will go to sale

  • The computer estimates the price of the creating the product based on current prices and determines the optimal amount to be produced

  • The product design automatically goes to factory(s) to be produced.

  • Those who booked the product can pay for it with their deposits, if it turned out more expensive than their deposits or was not produced, the deposits automatically returned.

I wonder whether it is realistic.

UPDATE

The described mechanism would be used for newer designs. The existing designs would be produced as long as there is demand.

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    $\begingroup$ its looks like present day croudfunding, but without scam and more automation. imho viable. $\endgroup$ – vodolaz095 May 18 at 17:28
  • $\begingroup$ Step 4 says that "the computer estimates the price of the creating the product based on current prices and determines the optimal amount to be produced". (1) That is not repeat not how prices work. The price of an object or a service reflects how much somebody is prepared to pay; that is, the price is determined by the market, not by the manufacturer. (2) How exactly does "the computer" determine the price? Determining prices in a planned economy is a non-trivial problem. Finally, I can only be dismayed by your casual dismissal of the work of engineers and designers... $\endgroup$ – AlexP May 18 at 18:11
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    $\begingroup$ @Anixx thanks. Please remember to edit your post with those clarifications. Never trust that people will read through the comments before posting an answer. $\endgroup$ – JBH May 19 at 13:30
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    $\begingroup$ "In this system there is no profit, so the prices are determined by the cost of production": this cannot possibly be true. Prices are determined by (1) the utility of the product or service to the person who buys it and (2) by the scarcity or availability of said product or service. Profit plays no role in determining the price; profit is what remains after selling the product and deducing the cost of production. If one can make the product cheaper that what the buyers want to pay then one makes a profit; otherwise, one makes a loss. @JBH: Note the need for reference prices from elsewhere. $\endgroup$ – AlexP May 19 at 17:08
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    $\begingroup$ @conman you can think of half the process as being crowdfunding-esque from the perspective that nothing is manufactured before people pay for it. The same could be said of Ginsu Knives and every other direct-to-market product, which is never manufactured before the orders are placed. But the OP's real problem is bullet #4, which is a verbose way of saying "magic happens here." That depends on a nobel-prize winning analysis of everything from the economy & gov to available labor. It's 100% non-trivial. $\endgroup$ – JBH May 20 at 6:31
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Since that can and does happen in the current world, it certainly is a plausible idea. However, I have one large issue with the question as posed:

Real-time planned economy with feedback

(emphasis mine). Is it possible for this to be a part of an otherwise functional economy? Sure. Is it possible for this to be an exclusive (or even primary) way by which people solicit/purchase goods and services? Definitely not. It's far too inefficient, which is why it is only a tiny part of our modern economy.

If I need another chair for my dining room table, I don't want to go online, look through proposed designs, vote, wait for the voting to finish, wait for final design, wait for it to be produced, and then have it delivered/picked up. I just want to drive down the street, look at what is available, and pick something. Same with my computer, my house, my car, my dishes, my towels, my sheets, etc... There are a few specific areas of the economy where such a process may end up producing genuinely helpful and improved products but (like with modern crowd funding), much will be a loss and would be a terrible way to purchase most of the items that we need on a daily basis.

Does this make sense as one aspect of an economic system? Sure. Does this make sense as the entirety of an economic system? Absolutely not.

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  • $\begingroup$ Well, I envisaged that existing designs would be produced based on demand by customers, and the proposed mechanism used only for new designs. $\endgroup$ – Anixx May 18 at 18:01
  • $\begingroup$ @Anixx Then perhaps you need more explanation about the goal of this system or what it is trying to fix. I suppose the "issue" is that I don't see the need for it. Because even with this new piece of data, I don't see why I would bother to go vote for a new design on a chair, or towel, or table, or whatever. Presumably there will still be plenty of choices around, so I presume I'll still be able to find all my daily stuff at the store. It seems unlikely that your average person will have any reason to interact with this voting system very often. How/when do you expect it to be used? $\endgroup$ – conman May 18 at 18:11
  • $\begingroup$ It occurs to me that this site uses a voting system and none of us really has a good reason to participate in this. And yet we do. So a) you are talking about a real problem with this type of system and b) it is also real in the sense that people are already solving it in the real life in ways that probably can be adapted. $\endgroup$ – Ville Niemi May 20 at 2:59
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This approach is, unfortunately, not going to fare too well in reality. It does work well as long as every single individual in the entire process is perfectly omniscient, though!

One of the major issues here is the design documents. If you look at your process, the key fundamental objects being passed around are information. Your idea person generates a sales pitch which is distributed to the internet. They also generate a vision statement for the idea which the professional designer uses as a seed to create their design. This design, of course, is itself just information.

Now these documents, in reality, are never perfect. I've invested in several crowdfunded ventures and been terribly disappointed with the final product. Had I not been an early funder, the final product would certainly never have caught my eye. So we're going to have to deal with the inefficiency of people not getting what they thought they were going to get. Indeed, it is worth noting that I didn't call this design document "the idea of a product or service," mirroring the terms you used. I called it a "sales pitch." The most successful pitches in your model are not the ones which are good ideas. They are the ideas which are sold well, good or bad.

In the non-crowdfunded world, we have to deal with this process as well. It's easy to have an idea that doesn't quite live up to its buzz. However, we have entire systems with dozens or hundreds of people involved to create a more robust process that produces the required product more reliably.

Also worth noting, the idea itself isn't all that valuable. I like Howard Tayler's take on it. I like it so much that I think it wise to reproduce it here:

Anytime people ask me where I get my ideas (and it happens all the time) I immediately jump up on a soapbox and explain to them that they're asking the wrong question.

My ideas, your ideas, and everybody's ideas have no intrinsic value, so it doesn't matter where I get them. They are not currency, they cannot be bought or sold, they are, in market terms, worthless. Worthless, that is, until somebody does something with them.

Right now I have several ideas percolating for scripts I should be writing. Those ideas have no value until I actually write the scripts. And in truth, the scripts themselves have limited value until I draw on them, and Travis colors them, and we put them on the web. Eventually those ideas become a product that I can sell, and then they have value.

The only monetizable product from this ideas step is a sales pitch, which ropes people into putting down a deposit on a product they've never seen, relying only on the words of a salesman.

We then get to the professional designer's work. You use the singular here, but for all practical purposes worth considering, the design work is a group activity. Even crowdfunded tasks typically have a team of 5-10 people. This design effort is no small thing. Rarely is one designer sufficient. For real interesting products, the teams are even larger. The team that turned "We want a CPU that has great branch prediction and a very fast L2 cache" into the Intel Core series of processors was hundreds if not thousands of designers!

And you stick them with the risk. The risk is on your designers if the product doesn't go to market. Accordingly, they will need to seek profit. There's no way they can do the design "at cost" because they have to cover the risk of the product flopping.

The designers are also not necessarily "in" on the idea. All they see are the design documents provided by the person who had the idea. In this sense, I'm reminded of a contest I saw as part of Odyssey of the Mind many years ago. The challenge was to build a lego structure as a team of two. The trick? One person gets to see the goal design, and must write down instructions for the second person to follow. Those instructions are then acted upon by the second person, who is not allowed to ask any questions. The challenge is to build the lego structure as quickly as possible (corresponding to as cheaply as possible in your system), without mistakes.

It's not easy.

Myself, I work on software. 100% of the user-provided "ideas" that I implemented required substantial iterative development to massage it from ideas-speak into a form which is more amicable to design. Most ideas I was given I rejected outright, simply because there was no affordable way to implement anything resembling what they wanted, even though they thought the idea should be cheap.

By the way, did you notice that your process involved people putting down deposits for what they think the idea is worth before a professional ever looked at the design and told you how feasible it is?

Now we get to the computer. The computer is responsible for the factory. Managing a factory is hard. It requires a tremendous amount of skill. And it's not as straight forward as you suggest where the computer just decides prices and quantities.

Most products can be designed several ways. In small volumes, one may 3d print a design. This is very costly, tying up an expensive machine for a very long period of time. In larger volumes, one may invest in "tooling," and construct molds which permit constructing these designs en masse. In even larger volumes, one may invest in entire toolchains custom tailored to meeting your needs.

Each of these require not only massively different levels of initial investment, but also require design changes. You design products differently depending on what their manufacturing process will be.

So the computer also has to make predictions of how many people will want, based on ... something. We know the initial deposits are a bad source of data because those people never got to see the final product, nor how well it performed.

We usually have entire teams of people, operating early in design, exploring market sizes and identifying the best manufacturing methods. These people are using computers, so they will always have an advantage over just a computer on its own.

Also, there is a question of R&D. I have a great idea: "lets make a car that earns 2 MPG more than the current model." A bunch of people buy into it, because MPG are good for the environment and the pocketbook. Now how do we make that a reality? Believe me when I say design firms spend millions of dollars trying to find ways to make those ideas into a reality. If they succeed, they like to keep the earned intellectual capital for themselves. This feeds quickly into the risk that the professional developers take.

In the end, consider your average design firm. Pick any one you want. How much attention do they give to unsolicited suggestions? It's highly unusual for such firms to take such suggestions (so unusual that I can't think of a single well known example of it happening). If this economic model was effective, it would suggest that design firms have a tremendous financial interest in getting unsolicited ideas (with a few deposits backing them).

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I think with some adjustment this is a very solid concept. However, before discussing the adjustments and reasoning, let me clear up the meaning of what an economy is and does.

Economy is a social domain that emphasize the practices, discourses, and material expressions associated with the production, use, and management of resources.

The only requirements for an idea to be a complete economic system is for it to define how production, distribution, and trade will be facilitated. Does it need to be competitive or have a free market? No.

That being said, generally many people favor competitive free-market economies since these things generally lead to innovation and more consumer choices than other systems.

However there are people who believe very similar concepts to yours would be favorable to other traditional systems.


Introducing: Programmable Economy.

In brief: Programmable Economy refers to "a natively ‘smart’ economic system that supports and/or manages the production and consumption of goods and services, enabling diverse scenarios of exchange of value (monetary and non-monetary)."

While I don't consider myself an authority on this concept, allow me to elaborate. The biggest change would be the introduction of a central interface. The central interface would replace all "middlemen" such as retailers, vendors, and stores. The goal of this is to ensure that economic benefits are being maximized in a timely manner.

Let's say a consumer wants to buy a car. They would go the central interface and say "I want to buy a car. It needs to be affordable, have good gas mileage, be reliable, and able to hold 2 adults, 3 kids, and cargo. The interface would search it's databases and make some recommendations and present pros and cons of each option as transparently and honestly as possible.

When the consumer has selected their product, the interface orders the product from the manufacturer. But cars require materials and other components such as steel and tires which the manufacturer. So the interface orders those components for the car manufacturer This chain continues for complex products, for example the interface would probably need to order the rubber for the tire manufacturer. Simpler products (see product complexity) like corn would not require this chain, as one manufacturer produces all parts of the product.

Finally, when the order is finished the payment for the car is distributed at a reasonable, equal, and non-exploitative rate.


Programmable Economies are designed so:

  • Consumers get products they want with little effort, at a reasonable cost.

  • Complex products become easier to make (especially for upstarts) and are more available for consumers due to streamlined supply chains.

  • Innovation is better rewarded through competition as 'better' products because the interface will recommend them without bias (upstarts can compete with less upfront cost).

  • The interface can give feedback to businesses on how their products compare to others and the 'needs' of the market (this information is usually reserved for those who can afford the cost of researching it).

  • The interface can anticipate market failure and prevent it

  • The interface (with human assistance) can praise and discourage practices. For example: profit margin for 'green' businesses and those who provide more jobs could easily be increased, and products with Tobacco can have their profit margins


Criticisms of Programmable Economies:

  • Exploitation would be hard to catch without human review.
  • How much over site should be given to the interface
  • How would it assign value to products / should products be worth what it costs to make them
  • How does the interface handle products on the basis of entertainment and social trends (examples: art, movies, and clothing).
  • Does it replace advertising / should advertising be a thing
  • To what degree should/would it correct for things to promote market stability

Conclusion: Without the crowdfunding and consumer designing their own product, your idea is considered not only viable but preferable to current economic systems. While it may not be universally supported, I personally believe it is at minimum, worth considering for real life application.


https://www.academia.edu/9294719/Urban_Sustainability_in_Theory_and_Practice_Circles_of_Sustainability_2015_

https://jshippingandtrade.springeropen.com/articles/10.1186/s41072-018-0027-0

https://www.iotforall.com/what-is-programmable-economy/

https://faculty.washington.edu/karyiu/confer/beijing06/papers/tanigaki.pdf

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  • $\begingroup$ In your model the interface is separate from the manufacturer. It just facilitates interaction between the manufacturers and the customers. In my proposed model the interface replaces the manufacturer. The price of goods is determined based on pre-orders and cost of manufacturing directly (the interface knows the function between volume and production cost per item so it decides the max volume that does not make the price per item to exceed the pre-ordered prices). Of course, the factory can be physically separated from the interface, but it does not do any decision-making. $\endgroup$ – Anixx May 20 at 22:55
  • $\begingroup$ @Anixx I know it's not a perfect fit but I thought it might be a good reference point and a bit more encouraging then other comments, lol $\endgroup$ – Andrew Mellor May 22 at 17:13

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