Favor based economy

Question

I was reading "The Long Earth" and one of the recurring themes was that there was no apparent scarcity. Plenty for everyone spread out across infinite earths. Now I have asked and read several questions involving a lack of scarcity so I don't really care about the fact that scarcity can never be eliminated (it can't).

The thing that really interests me is that one of towns that arose on the infinite earths was that people basically paid each other in favors. Simplistically, if one person mowed you lawn for you, you owed them and would later help them harvest their corn, or some other such thing. This is fine on the small scale. But my question is this: What would a large scale economy based on favors look like? For this purpose, you can think of large scale as a large city or a state. Specifically, how would it work? What jobs would be "upper class"? How could contributions and size of favors be measured in terms of worth? Would it even be possible? I hope this proves to be a nifty thought exercise.

Answer 1

The first thing you have to do is quantify favors. A good start would be things like:

1. How long does the favor take.
2. How difficult/dangerous is it.
3. Supply/Demand of this particular favor.

That will let us compare disparate favors, so that everyone agrees that mowing a 1 acre lawn is approximately equivalent to 2 hours of helping with corn (or whatever). Now we'd probably have some sort of arbitrary tokens, or ways to save/record favors. We could call that "currency". And of course favor values will change over time with population, technology and the like, so the "market" will adjust, and...

Oh. I guess we're just back to money.

The problem with favors is that they're subjective. Bob thinks that mowing is lawn is worth 1 hour, but Alice is expecting 2 hours. And Casey down the street thinks it should be closer to 2.5. This gets even worse when you add in big companies and lawyers - can you imagine the legal fights that this type of economy would create?

On the other hand, as soon as you quantify favors you're basically replicating a money based economy. You have a way to value someone's time/effort in an arbitrary context, and you can then use that to trade for other people's "favors" or goods.

So really, I don't think this is possible. To make it work you need everyone to agree on what a favor is worth, and by the time you're done with that you're no longer on a favor-based economy (or, taken the other way, we're already on a favor based economy, and we just dress it up to look pretty).

Edit:

Thinking about this more. The reason favors work small scale is that presumably you're trading with people you know, which is an incentive for you to not cheat them. This makes it easier to agree on favor values. When you go large scale you're trading favors with people you don't know, and valuations become suspect - it's more tempting to take advantage and weigh favors to give yourself the best value possible when it's a total stranger.

A possible solution to this would be to have an arbiter who could judge and value favors. This could be anything from a god/priest class (magic setting), to human or AI judges in a high tech setting. The arbiter wouldn't necessarily be used for every favor exchange, but would be available for anyone to use if they felt they were being cheated. This acts as a global incentive for everyone to value favors as fairly as possible, since they can always be called out.

In order to make it a really bad idea to cheat, the arbiter would need to punish people trying to work the system. For example, if you say mowing the lawn is worth 1 hour of corn, but the arbiter thinks 2 is fair, the arbiter's decision might be to award the other person 3 hours instead. This would work the other way too - if instead Alice was trying to claim 3 hours, and you just wanted 2, the arbiter deciding in your favor might give you a discount, and now you only owe 1.

Answer 2

The book Sacred Economics, by Charles Eisenstein addresses this brilliantly. He proposes a 'gift economy'. The thing that is absent from the OP question is the reason for doing work at all.

The example of mowing a lawn is work that somebody wants done. If someone else does it, there is an implied favor that has to be repaid in the future. In the postulated example, almost equivalent work is done in exchange.

This breaks down, as the other posters have already pointed out, and tried to solve with arbiters and money and such.

Looking at why we even do work at all is far more fruitful. In an ideal or imagined society, everyone is able to follow their passion and purpose. One only does what one cares to do. Not necessarily what one wants to do, but what they care to do.

Why we don't have that in current western societies is an interesting inquiry, and one that is probably the genesis of the book mentioned in the OP - The Long Earth.

The mind-shift to a gift economy is huge - it goes from 'I mow your lawn so you owe me and I can demand repayment in kind'. To gratitude - 'You gave me a chance to do what I love - mow and beautify a lawn' There is no expectation, except perhaps the hope that you will be allowed to mow that lawn again in the future.

If some time down the road, I have corn that needs to be harvested, I just find people who have a passion for harvesting corn, and make that available to them. It may include the lawn owner, but that is irrelevant.

In this model, there is no need to track who did what for who, or when. It works on any scale. It will accommodate cheaters and 'gaming the system'.

Eliminating money or any such 'tokens' eliminates the ability to hoard it, to make it scarce, and to use it to control people to do what they don't care to do.

It also requires us to grow up, to put aside our outdated ways.

Answer 3

In order for this to work without becoming a different form of money, it sort of has to happen on a small scale.

Say you mow my lawn, with the understanding that I'll help you bring in your wheat. I might not be happy if you trade that favor to your neighbor, and then he comes and asks me to clean his pig pen.
Likewise, I don't know if I'd accept a traded promise of a favor if I don't know the person who's supposed to be doing the favor. What if they aren't that skilled, or won't keep their word?

A favor based system would probably work fine for most stuff on a one on one basis (you help me and I'll help you, if you don't keep your word I'll remember), so the big question is how to take care of the big stuff, like keeping up the roads and stuff that are usually take care of with taxes?
The short answer is that communities would have to take care of it together with each person pulling their weight. Work parties and community events. Every one goes out and fills in the ruts, or helps the people filling in the ruts, driving in gravel, carrying water, cooking food, etc, and afterward you have a feast with dancing and singing.

A favor based economy would really be a reputation based economy, with each persons reputation buying them what they need, and if they spend all their reputation without doing things to replenish it, they would be broke.

Edit: More thoughts on reputation/favor based economies...

Say you move to a new area where no one knows you, you'd basically be broke. There might be some people that would do you a favor on spec ("You look trustworthy, I'll do this for you"), but for the most part you'd have to build up your reputation capital from scratch. It wouldn't have to take long. Things like community work where you can show your work ethic, doing small favors just to help people out, you can get a reputation as a good guy and a good worker real fast.

The other way is if you had references ("Sir, I don't know you, but I know Bob, and he says you're a good guy, so that's enough for me"). This would work very similar to lines of credit. Bob is known to have good character, and he vouches for you, so people of the new community would be more willing to help you out. However, if you don't end up pulling your weight then those lines of credit would dry up, and Bob could lose credibility in the process.

A favor economy works best if you don't keep score. I could do you several small favors without asking for one in return, just because I don't have any needs. This could start to make you nervous, wondering if I'm saving up for something big, like asking for help hiding a body.
The best case is when I don't keep track of all the times I helped you, and you help me when I need it just because we're neighbors and I've helped you in the past.
The exceptions are bartered favors (help me roof my house and I'll help harvest your field).

The one thing I'm not sure how to resolve is land. In the Long Earth land isn't an issue because you can step sideways and have an earth all to yourself. With out a long earth you could abolish almost all scarcity except for land... I don't know how property purchasing would be figured out, how to determine who gets beach front and who gets landfill facing... etc.

Edit 2: Why is this not currency?
With a currency everything is given a number. This unit of work is worth this amount of money, and this other unit of work is worth a different amount of money. This is not a criticism of money. Money is a great system. It lets me, a programmer, hire a plumber to fix my pipes, when he doesn't need anything from me. Otherwise I'd have to find out what the plumber needed, and then find someone I could to a favor for that that could in turn do what the plumber needed. That starts to get complicated.
But OP didn't ask about how to design a new currency, he wanted to know if a economic system could be based on favors only, without any currency.
The answer is it could, assuming that people are selfless enough.
It would rely on people wanting to help out others to the point of inconveniencing themselves, with the hope that the other person would do the same some day.
It would be easier if it was mostly a post scarcity world like in the question, since then people wouldn't be giving up stuff other than their time.
If I only have 5 chickens and you want one that might be a hard thing for me to give as just a favor. (maybe as a bartered favor?)
But if I have a lot of chickens then it stops being a big deal.

The other thing that makes reputation different than money is that I can be a pretty horrible person and have lots of money, and buy all the things.
Being reputation and favor based would give me an incentive not to be a jerk.

Likewise, I could have a pretty good reputation with almost everybody in town, but a bad one with my neighbor because my dog keeps getting into his yard. It's not something you can really put a number on, it all has to do with personal relationships and feelings.

Answer 4

You should try to visit, say, a surgeon, and ask him/her how many people can take part in a complicated surgery.

That is, just count the people who work in the op room at the same time the patient is it.

Now, remember that before you entered, someone cleaned and desinfected the room, someone else sterilized the tools, the technicians fixed any faulty instruments (or an orderly got a fixed one from storage).

Then, see that after you leave the surgery room there are some nurses checking that you awake properly. Then you are sent to a room, where there are at least 3 shifts of nurses (of course, you only need one for shift, but you need one or two extra nurses for the weekends). More cleaning staff. Orderlies bring in the food, again technicians fix anything that breaks, pharmacists ensure that you get delivered the proper drugs...

Now, think how much you would need to work just to find something that you can offer back to each of those people. Do you run an add in a newspaper? "In need of cerebral surgery, I am searching for surgeons, nurses, and pharmacists; can offer programming skills and decent cooking abilities". And then, you have to negotiate with each of them what is the proper value equivalence, factoring in the years needed for formation and training.

I won't even worry about the people who built the hospital, or the tools or produced the drugs.

How much time do you think it would take to get such a deal?

As specialization makes interchanges involve more and more people, barter becomes less useful because:

• it becomes more difficult to stablish the value of the goods exchanged (what is the value of the years of formation for my work?).
• the set of goods and services that each person may offer becomes a smaller set of the total goods and services available, it becomes more complicated to find a partner that offers what I want and wants what I offer.

Answer 5

A bit of a different take into the concepts of favors. I hold it would not work as an economic pillar, because favors work in a completely different way currency does; the moment a favor-based economy becomes a currency economy, it stops being an exchange of favors.

To get to my reasoning for that we need to determine what a favor actually is: it is an immeasurable act done for someone else as an act of goodwill that is done in the provider's terms to meet the plea of the requester as best as they can. The exchange of favors is by nature uneven, unfair, and completely based on goodwill and on what can be spared. Very rarely someone will do a favor for another if the resources they spend on it will result in a detriment to themselves (and when that happens, it generally means that there will be factors that will contribute to a very good chance of a valuable return, especially intangible returns, such as good regard or goodwill).

A favor based society that has discarded an economic system works based on the works that they do for the good of the general: A surgeon and their entire team would not work for money, but to save as many as possible that they hold in good regard and would deem worthwhile to save. A farming community would generate as many goods as possible to keep their society fed, builders would build houses to keep people sheltered, including themselves. It is a society based on goodwill and keeping each other in good graces, where reputation plays a huge deal and exploitation is a constant concern. It is literally every organization being a charity.

Now, a favor-based society with an economic system is something that is also compelling. Take the John Wick movies, for example, everybody goes crazy about how much each of those coins is worth because each of those coins is a favor an assassin is calling in for the favors they have done for their secret society. the worth of each coin is a single favor. In a society where normal money is a currency a favor value is measured on what can be spared and it is not even or fair.

For example: Say you did a favor overseas for a man who was collapsing in the streets, extremely circumstantial, you fed him something, a hot meal or an apple because you sell food and is dismayed at what gets wasted, so you could spare the food. There is a complete imbalance in the situation (for the leftover food to you is worth very little, but to the collapsed person is his salvation). Years later your stand falls into economic disaster, you're homeless in a foreign land and you stumble into this guy you helped a few years ago, and turns out he has acquired land and a few real estate places and has one that is not being currently rented, he offers you the place for three days and says he can spare no more than that.

One favor has no equivalence to the other, except that these two people had a need that could be met by the other at that opportunity and they did. Not even because they hold each other in good regard (though that could be a factor), but because they could spare resources to do something that feels right for them and that could help them to keep in each other good grace.

Favors are completely counter-economic. They are not optimal, they are done on whims and goodwill, completely uneven, unfair, and not necessarily altruistic. One can do favors just to incur goodwill, especially if you're incurring the goodwill of people who are likely to do you favors.

It also does not mean that favors are a thing that is absolutely good. Politics deal in favors all the time: you do something for me, I do something for you. the Mafia as well, and there are penalties for not returning the... "favors" those groups provide.

The pariahs in a favor-base society are:

• those who are deemed to be lazy
• those who are deemed to do poor work despite their best efforts
• those who receive too much and return too little (be it in goodwill or in favors) There are others who do not benefit from this system for the most diverse reasons.

If you like that sort of thing here is a formula that is often used to measure someone's standing in a group/society:

Compensation + goodwill - perceived work quality = 0

If someone's perceived work matches their compensation they incur zero goodwill (they are doing nothing more than what they are paid for); if the work is worse than the compensation it results in negative goodwill; if the work surpasses compensation it generates goodwill.

The thing is, the value of goodwill is not something redeemable or that can be asked for or demanded of the one who is receiving the work done. And just because someone holds you in good regard, doesn't mean that they will reciprocate anything.

And all this is an oversimplification of the system because there are always other factors at play. For one this considers a single group. When multiple groups are involved things get more complex, because there are values associated with each group that might affect the perception of the value of work done by members of another group, or the goodwill one group has for the other. It becomes very subjective and then we get too close to the society we currently have...

Apologies for the wall of text... But I felt sharing my perspective on favors would contribute to the discussion. (in exchange for goodwill! hehehehe)

Answer 6

I fix your roof, you give me a token, I use that token to pay for my potatoes from someone else. People doing jobs which few people are able to do or want to do can demand a premium. You do me the favor of letting me stay in a house you own, I give you some tokens. etc

It would probably a lot like our existing fiat currency system. I can't track favor networks amongst millions of people but I can trust a 3rd party to keep the "favor token" supply limited so that tokens I earn today are worth about the same by the end of the week.

Answer 7

One major difference between favour and cash as I see it the inability to transfer favours. This has major implications for old people, the disabled etc

eg. A young man walks into a bar and asks for a drink. Sure! says the bar man. I have dozens of things I need doing which you can repay me by doing over the coming months and years.

An old man, totters into the same bar, takes a suck from his oxygen cylinder and asks for a drink. No Way! says the bar man, you'll be dead before you can pay me back!

Another thing others have touched on is credit limits:

Hey mr luxury yacht maker! can I borrow your super yacht for a month? I'll totes pay you back. and that helicopter, and all that food, and etc etc

I think such an economy would force people to consider carefully who they 'sold' to and ask for payment up front. eg. Sure you can have a glass of wine! but you need to spend 2h picking grapes first.

Answer 8

To avoid having a currency system with a different name you need to stop giving the favour a value other than the time needed to do it. Also, you have to track that time It kinda works like a currency though. I'm a programmer. With the actual currency system my work (=time) is deemed more valuable than that of the person cleaning the office floors where i work (I earn more money for the same time spent). In a favor based system that is different. I don't like to clean floors, and I'm not good at it. So I could clean the floor myself, "wasting" my time, or have somebody clean it for me (probably faster and better than I can). Lets say that person needs 1 hour for that. That's an hour (at least) that I didn't spent, so that 1 hour of cleaning is worth 1 hour of my time, since I did something else while the floor got cleaned (and looking at it from that point why is the person cleaning the floor getting so much less money? I don't want to clean the floor, and most others round here including the boss don't want to do it, we want to spent our time on other things, so this cleaner frees our precious time - the floor has to be cleaned after all!). Once you get that mind set you just track the time of the task and record it in some kind of database (or token or whatever). The time is recorded for the environment where you spent the time - 1 hour of floor cleaning for company x is stored in their DB. You can then "exchange" it for goods or service from a partner or employee of that company x, so you better watch out who you work for ;-). That recorded time works like a debt, that's why the whole system is similar to a currency system, but the value of the "currency" is the most precious good available - human lifetime.

Answer 9

I belive the book "Debt - the first 5.000 years" by David Graeber might give you a good start here.
In the beginning of the book, he describes that there never were "true" favor or barter economies (as in "I mow your lawn so you help with the harvest" or "I have five arrows and you give me a chicken for them").
In one chapter, he describes what Lewis Henry Morgan found out: In the Six Nations of the Iroquios it became apperent that most goods were stockpiled in longhouses and then allocated by women's councils. (This is a higly abreviated quote from the book).
The basis however could be used to build your favor based economie. As in, the favors are not between individuals, but for the group and goods themselfs are allocated by the group.
If a men mows the lawns of many people, they regard him higher. If a men helps with the harvest, the farmer as well as his fellow harvesters regard him higher. At the end this could go to an individual "value" on which the amount of goods from the common stock could be based.
(He did so much for the community, he should be rewareded accordingly).
But all this would always be between the person and the group (or city / state / whatever) NOT between people directly.
This way you avoid the "Mary thinks this help was worth 2h, but Peter only thinks it's worth 1h" problem and do not have to resort to money either.

Answer 10

A favor based economy can be studied just like any other economy, but it does take off in different directions.

Fundamentally, a favor based economy is a barter system. You barter for goods and services, except we introduce two new classes of goods that are available, "granting favors" and "redeeming favors." With these rules in place, the basics of Pareto Optimality handle the rest. Transactions are made when both parties consider themselves "better off" after the transaction, for whatever definition of "better off" they are beforehand.

The interesting bits start to show up when we look at what kind of good a "favor" is. Unlike most monetary or bartering systems, the "value" of a favor is not clearly understood at the time of the agreement. This makes it hard to assign a clear definition of "better off." At first sight, this makes the favor system look like a bit of a non-starter.

But what if the other goods and services involved in the transaction are unclear as well? What if instead of trading "ownership" of an apple for a favor, you traded something less binary. What if you traded a favor for a favor? What if you trade "I'll let you eat some of my apple, as a favor" as your part of the trade? Now, if you decide that this person does not deserve really good favors, you short them. Because the item's ownership was never traded, merely a favor for apple in the future, you might decide that you are going to honor that favor for a smaller chunk of apple than originally intended.

So how do we avoid getting shorted by this system? The next natural step is to break the transaction up. You might trade "10 favors to get to eat some of my apple" for "4 favors of lawn mowing." The expectation would be that they would slowly call on favors to eat apple, you would slowly call on favors for lawn mowing. If either side tried to get greedy (such as them calling in all 10 favors at one to get the whole apple), they find the value of the favors they had were suddenly worthless. Both sides must continually work to keep their favors valuable by working with the other person.

Looking at the repercussions of this is difficult if we look at the problem discretely. Discrete favor trading yields so many possibilities that it would be hard to fit it into a worldbuilding answer. So, I'm going to take it to the extreme. Every trade made is a trade of a continuous stream of favors in exchange for a continuous stream of favors. Favors should now be treated like a fluid flow, rather than a set of individual packages. (bringing this back to discrete behaviors at the end is left as an exercise for a reader)

So now the process for transacting is trickier. Each favor comes as a time stream. For simplicity we'll look at it as a function, F(t). So you may give "Favor for some apple" as a function of time. You define this favor to be slow enough (values weighted towards large t) to give you time to see how the trade fared you, but fast enough that you don't have lingering favors to account for.

This process would naturally have to be codified. "Favor for some apple" may be effective in small regions with few people, but it is terribly dependent on everyone agreeing what that means. So eventually everyone would agree upon some codified notation. The most universal I can think of is "Control," specified in a spatial-temporal way. You would cede some control over the apple during a time period. They may use their control to try to eat some of the apple. If you think this is a problem, you may try to make other transactions to acquire a competing interest in controlling the apple to try to take the apple away from them. Control is literally a measure of your "rights" to influence the world around you.

Now, truth be told, Control as a 4-d metric over all space and time is a real pain for transactions. Defining it this way will slow trades down immensely, so there will be a natural tendency to come up with simplifications which boil it back down to something manageable.

One approach is to try to come up with a common value of control. You might define how much control it takes to control an apple sufficiently to take a bite out of it. The key simplification here is that it doesn't matter who is controlling the apple, the price is the same. I use "price" because we just spontaneously reinvented a currency. Control of an apple now costs $1.50 or something to that effect. You know what you can buy with a dollar.

Another approach is to manage control by sizes. Clearly the process of managing rights to an apple is of a different caliber than rights to an orchard or a human life. In this approach, one finds natural concepts like family or government become living breathing entities exerting explicit control over situations. Now naturally small controls are much easier to come by. There's a vast multitude of small things, so a vast multitude of ways to handle controlling them. However, controlling large things is a different story because there are fewer large things to control. Every transaction would be valued by plotting control on a value vs. size chart. While transactions could be complicated, the most obvious ones are where you provide control to all of the larger entities you are part of, and one where the larger entities have to pony up for your actions. This system should feel much like an oriental honor system. You seek to bring honor to the family, and on occasion call on the family name to get something you need.

One could also only concern oneself with the longest term control possible. You trade away as much short term control as possible in exchange for the long game, like an investor earning interest. The extreme version of this would be a religious figure such as a monk. They devote their entire lives to a greater cause, and rely on begging to have enough control over their lives to feed them.

The list goes on and on. Hopefully these are sufficient examples to show you how to weave a favor based system into your economy by tapping real life approaches to control of the world. However, I must stop here. Why? Now that I have argued that there is a way to convert the favor based economy into real life social structures, it is clear that a solution which allows a favor based system to work perfectly on large scales is also a solution that creates real life social structures which work in perfect harmony. It is up to you as a world builder and a dreamer to try to figure out social structures which can handle such exotic environments, but once you do, you have found the answer to what a favor based economy looks like!

Happy hunting!

Answer 11

Many other answers point out how the favor-based economy returns to a money-based system when you consider "favor-debt" to be a form of currency. From a macroeconomic perspective, however, this currency would behave quite differently than a commodity money system or a fiat money system run by a central bank in that because no one can run out of money to pay you, there should be very little to no cyclical unemployment or recessions.

If the strong cultural norms are that you must repay favors (strive for zero favor-debt), and that you also must not turn down a favor, such an economy should always

Answer 12

The only historical "favour" based economy I can think of existed in many ancient civilizations alongside the barter/currency based trading system.

Generally speaking, a stranger could go to anyone's house and expect to be fed and clothed by the householder, and if the homeowner was wealthy enough, maybe even a gift. The householder would expect to be treated the same way if they were somehow stranded during their travels (and not necessarily by the person they had fed or clothed in the past).

There are many examples during the Odyssey, as Odysseus travels through the known world. He is taken in and feted by the God of the winds, the nymph Calypso, his goat herder on Ithica (when disguised as a beggar) and is shocked to find this hospitality is not on display in his own palace (his son does take the "old beggar" in, not realizing who he really is, but the assorted princes and nobility who make up the suitors do not, to their eventual misfortune).

This reflects both a cultural notion of piety to the Gods (who are always offered the first choice of cuts and the first libation of wine), as well as a practical notion of "paying it forward" so that a person suffering from misfortune like a shipwreck will be able to expect help anywhere in the Greek speaking world.

As an "economy", this notion is difficult to translate on many levels (as discussed in other answers), but as a cultural notion of extending help to those in need, it is possible.