Freeconomics

Mark Boyle is no ordinary man. He is a self-styled ‘community pilgrim’ and he hit the news over the weekend after setting out to walk from Bristol to India - without using money.

“Most of the problems in the world such as greed, fear and insecurity, manifest themselves in money,” he is says, “so I’m going out and instead putting my trust in the universe.”

Mark aimed to rely on the generosity of fellow humans to provide food and transport en route to Porbandar, the birthplace of Mahatma Ghandi. Unfortunately the plan was thwarted at Calais when French customs officers refused to help him and his two companions and they called off the experiment.

The news story on the Sky website inspired me to research the Freeconomy movement including an online skill-sharing exchange which aims to match needs without the need for money.

But what is money anyway?

According to economists, money performs a variety of functions. It acts as a medium of exchange, a standard and store of value, and a standard of deferred payment. The argument against a non-money, or barter, economy has traditionally been about the costs of finding a double coincidence of wants: if you wish to swap a goldfish and a Persian rug for a new piano, you need to find someone with the exact mirror of your preferences - and this takes time and effort and may eventually be futile. Money lubricates this exchange by providing a universally accepted (within a given economy, anyway) and divisible token of value. Even where formal money does not exist - for example, in prison (I am told) - proxy currencies may emerge (cigarettes are a commonly cited example).

The Freeconomy movement is harnessing the power of the web to put traders together. If I need the brick wall at the front of my house mending (which I do; it’s a long story) I can log on and search through the 4000+ members for a brickie…. who wants economics lessons.

I applaud the idealism of the freeconomy movement. They are trying to achieve a more peaceful, less greedy and more environmentally friendly world and this is a seductive opportunity. But the problems I can think of are:

- what if there is no brickie desperate for economics lessons? We would then, presumably, need to find someone who wants economics lesson who could also provide something the bricklayer wants… but this is getting complicated now. Perhaps a token system of value could be used to allow for different quantities and qualities of people’s time… but, oops, that’s money isn’t it?

- measuring and comparing the standard of work: I could lay on a perfect economics lesson but what if I am unhappy with the work of my bricklayer friend? I can’t help thinking that threatening to sue would go against the spirit of things.

- geographical distance: who is going to pay each our bus fare?

- how would sophisticated goods such as a laptop or a house get made when the diversity of skills required would be so complex? I can’t help feeling that the Freeconomy movement would fail to take advantage of division of labour and economies of scale to a sufficient extent to provide much more than a (by modern Western standards) pretty primitive society.

Okay, so I know I’m (deliberately) missing the point - particularly in the final point above, which is probably a success criterion for an insider in the Freeconomy movement. I’m sure there are plenty more problems with an economy built on the bartering of skills, and a good exercise for economics students would be to find them. It could be argued that in a better world altruism would shine through and I would provide my economics lessons without measuring the exact return I receive. But the notion of work would have to be adjusted to reflect the social rather than personal reward received.

Neo-classical economic (wo)man is a cynical creature. S/he works for money to spend on leisure so as to maximise utility. I have never met anyone for whom life is so simple (or simply awful). We all go the extra mile when we feel like it - and are lazy at other times. And I’ve certainly spent money which failed to maximise my utility. I would love to think that we could live in a simpler world and maybe I shoudl sign up to offer my skills.

But talking about economics without getting anything back in return sounds a lot like a normal day at school to me…