A reverse ripple network that links the right to Work with Consumption.

One of the tenets of Keynesian Economics is that the current crisis is the result of Under-consumption. I disagree. I think that the problem is low profitability.

The basic idea can though be repurposed in an economy that does not allow profits to be an incentive of production, such as in my proposed Ryaki Economic Network .

The main idea behind under-consumption is that because income equals expenditure in the macroeconomic level, reducing the expenditure leads to a reduction of income. It is for this reason that Keynesians propose to increase public spending during crises.

  

In this video, Varoufakis tells the audience that austerity in the scope of a household works because if you spend money on a beer , you will not have money to spend on other things.

The reason is that workers do not control the amount of work that they can do to replenish the money they have. Even though, Workers have the right to work , someone needs to offer them work. Thus individually, they can do little to increase their income. Thus the income can be considered as a constant constrain that determines economic choices.

If I = Income , and bc = beer consumption , then the remaining income is

I - bc.

 In the ryaki network, or in general an open value network, openness means that anyone has an equal right to participate to the network and thus create value for himself.

In other words, each worker has an equal right to work, assuming he is fit for the job. All created value is returned to the workers themselves, there is no extraction mechanism as in capitalism.

Even though this system is egalitarian, the resources of the system remain finite and thus the amount of income will remain relatively constant and constitute a constrain to economic choice as before.

The reverse ripple network tries to change that. Let us modify our Ryaki system a bit.

Before : Everyone has an equal right to work.

Now : The person who has consumed commodities of value x has priority over someone that has consumed y if x > y. 

After someone has worked z hours, then this is removed from the value of consumed commodities. (x - z).

Now let us look at the constrains of a household income.

 If C = consumption, and I = Income , then I = C.

This means that a person has no restrictions on expenditure. The outcome for the economy will be profound. Work that was before done by household members to save money will now be done by external services. (ex . Cooking, Cleaning) . Given that the external services have  much higher productivity due to the investment in tools, this will decrease the total amount of work performed in Society.

Now, one might correctly ask how the network will provide so much work to compensate for the lost income. The trick here is that one's income is the others expenditure. In other words, when someone spends money in the economy, he creates work for himself.

Here , though, lies a problem. The transformation of expenditure to Income in the macroeconomic level is not automatic. Moreover, there are economic imbalances between geographic regions that do not permit such a transformation from happening.

Let us take two geographic regions (like Greece and Germany) that have different capital intensity and where one has a trade surplus over the other,  (Gemany). Will our naive new rule allow greek workers to work more to compensate for their consumption? Obviously not, their expenditure creates work for the German population. The only option is to immigrate to Germany.

The reverse ripple networks solves this problem by giving an incentive to spend only to products that create Work for the Spender. 

Let us consider 3 different productions. a fishery (F), a brewery (B) and a carpentry (C) . 

When a carpenter buys x fish, a fisherman works x to catch the fish. In a reverse ripple network, the carpenter is awarded x for his consumption and the fisherman (-x). Now the fisherman buys a beer for y. The network now is like this.

c -----> f ------>  b

  x    (-x)  y    (-y)

If a worker at the brewery buys a wood table of value z, then the fisherman has indirectly provided work to the carpenter of value , assuming y > z , z.

The network after the purchase of the table:

 Assuming (x < z)

c -----> f ----------->     b    ------------> c

  0    0  y - x   (-y + x)  (z - x)     - z + x

(Negative values can only exist at the places of work, and positive values can only exist at consumption.)

Now, let us propose our new rule. The workers that want to participate in production are ordered based on the negative value that they have acquired. If they have a lot of negative value, they have less priority.

In our example, considering that we have a computer application that helps the carpenter in his consumption, each consumption choice is associated with an amount of value that will reduce his negative value. In other words, each consumption choice is associated with the amount of new work that he creates for himself.

 The carpenter has (- z + x) negative value. If he buys fish, or a beer, he could create a maximum of (z - x) work for himself. 

In our example with Germany and Greece, Greek workers will select local products for their consumption over cheaper German ones because this is the only way to guarantee their income. Similarly German workers will be incentivized to buy Greek Products. Eventually, it will be beneficial for all if new capital investments occurred in Greece. It would reduce economic immigration and increase the trade between the two countries. An increase in Greek exports will enable an increase in Greek imports as well. 

 To summarize, I have tried to solve two problems here. First the fact that income constrains determine expenditure and secondly, that unequal capital intensity and productivity levels between countries tend to 

create a permanent trade imbalance that leads to increased Debts and bankruptcy by the weaker country.

My proposal can dramatically increase the efficiency of the network.

update : 

 I do believe that this idea can become better. Workers can decide which jobs they want and accumulate points with their consumption through the use of the ripple network. Then , when they work , they spend those points. This is a much better version.