The idea behind a time bank is pretty simple: instead of
being paid in money you get paid in time credits—1 minute for every minute of
labour that you do. Here is what psychologist Tim Kasser has to say about them
in The high price of materialism (a
pretty good book, all things considered):
"…people donate a number of hours of their services
and then receive an equal number of hours of others’ services in return; in
such systems, the work of a lawyer is considered equal in value to that of a
gardener…[time banks] work to support neighbours, are egalitarian in their
sense of what people’s time in worth, and are rarely used in ways that have
harmful social and environmental costs. ('The High Price of Materialism' pg. 114)"
This strikes me as incorrect. Time banks must have substantial social harms. People’s time is worth different amounts, and this is both
necessary and morally acceptable. To illustrate, let’s
take the example above—lawyers and gardeners.
To become a lawyer one must first qualify for expensive law
school by being an outstanding candidate. Once there you must invest 3-5 years
of your life learning very difficult subject matter in order to become
qualified. As a junior lawyer you aren’t very good at your job. As such, most
firms pay you very little while you are on so-called ‘probation’. A graduate
lawyer at Ashhurst makes $80 000 or thereabouts. That is a substantial sum. But
they work 60+ hours per week for at least 50 weeks a year. That works out to
$26 per hour. I used to make that working the check-in desks for cruise liners.
Once you’ve cut your teeth and proven you are an asset to the firm you receive
a substantial pay increase (this is long before making it to partner), but this
is still to somewhere in the order of $35 per hour. The big bucks don’t start
rolling until you are a partner with two decades or experience and proven
skills that are marketable and billable.
Meanwhile, a gardener needs no qualifications and must
invest only a small amount of capital to get started. Their wage is based
almost entirely on their physical labour and has very little to do with
inherent ability. From the get go they earn about $20 an hour and quickly work
their way up to maybe $25. Once there they need to start a business and get
employees in order to earn more.
So what’s wrong with treating their work equally, as time
banks do?
It’s a problem of incentives. If lawyers earn the same as
gardeners, why would anyone become qualified as a lawyer? Why pay the extra
cost of tuition and put in the extra effort of study when you can earn the same
as a gardener immediately? Citizens in a time banking society would specialise
overwhelming in jobs requiring little to no investment in skills and would
avoid high effort jobs. Yet it is precisely these jobs that we increasingly
need as we become technologically advanced—doctors, engineers, mechanics,
teachers etc.
Another problem is that time is a very imprecise way to
measure the value of a thing. What about jobs that require a lot of time but
little effort vs. jobs that require a lot of effort but not much time? Is
minding a car park for an hour worth the same as performing a 15 minute piece
of eye surgery? How can you effectively differentiate between the values of
these tasks if you pay in time?
High wages don’t exist by mistake. They are overwhelming a
reward for earlier investments of effort, time and money. They reflect higher
levels of productivity resulting from higher levels of education and innate ability.
Certainly there are some unjust elements to wages, but on average they reflect necessary incentives for getting people to
skill up in areas where there is demand and to encourage high ability people
into jobs that are especially taxing that only they can handle. If you act as
though everything is worth the same amount, then people will not invest in
things that are actually more expensive, whether in terms of cash or effort. Pretending
things are worth the same doesn’t make it true.
A more technical problem with time banks is that they rely
on the labour theory of value, which is a problematic theory. The labour theory
of value is that the worth of some item is (or ought to be, some Marxists would argue) a reflection of the amount
of labour that went into it.
This is incorrect. Indeed, the market theory of
value, where the worth of an item is determined by its supply and demand for it
in a market, superseded the labour theory of value precisely because it answers
puzzles that the labour theory of demand cannot. Let’s examine two issues.
First, let’s imagine a man who really enjoys making wheels but is of only
modest skill. He spends two months making a wheel. He then takes it to market
and demands the equivalent of two month’s wages for it. Buyers in the market laugh
and purchase wheels for the equivalent of an hour’s wages from the wheel
factory. It would seem that the labour theory of value is completely
invalidated. Something is only ‘worth’ what people are willing to pay for it.
Consider another case, that of the thirsty man in a dessert.
How much do you think he would be willing to pay for a diamond? Almost nothing,
because he doesn’t need a diamond, and the chances of him being able to sell
one before he dies of thirst is very slim. Given his limited budget of time
(and money) he should not waste it haggling over a diamond. How much do you
think he would be willing to pay for water? A lot given that he will die
without it. How much will it cost? There isn’t much water around, so it is
probably very precious to everyone nearby. Here we see the emergence of supply
and demand. There is a supply of diamonds but no demand; and demand for water
but limited supply. The value of the diamond will be low while the value of
water is high. This is despite the fact that mining diamonds is hard and time
consuming while tapping an oasis or aquifer is relatively quick and easy.
The time bank uses the labour theory of value to identify
the worth of some service and in doing so inefficiently distributes that
service. Not only will nobody become a doctor in a time banking society but
everyone will want a doctor’s time because it is relatively cheap. In exchange
for an hour working as an adventure tour guide I can get cosmetic surgery.
There will consequently be an undersupply of medical services and an excess of
spare time wanting to be spent on medical services. This is an inefficient
situation. The market for medical services cannot clear unless the time-cost of
such services rises. But the cost of the medical service can only rise if the
time-value of the doctor’s services is given a premium above the time-value of
the gardener’s services. This is exactly what we do when we pay doctors more
than gardeners. Money can be exchanged for any service, and doctor’s services
are worth more than gardener’s services. Now we are right back at ‘market
ideology’.
One might here argue, as many Marxists do, that the market
value might be efficient, but it is not ‘fair’. But isn’t it perfectly good and
just that the person who wants something the most must pay the most for it? I
challenge you to design a fairer way of rationing goods. The Marxists said
‘from each according to his ability, to each according to his need’. But here
we again run into the incentive problem outlined above. Why would someone with
high ability bother to demonstrate that ability if it meant more work and yet
the same reward? The experience of communism bears out these theoretical
propositions. Eastern Europe under communism was characterised by mass
idleness.
Moreover, is it not perfectly fair and just that someone who
has to put more effort into their work is rewarded more substantially than
someone whose work requires less effort? What the size of this discrepancy ‘ought’
to be is difficult to estimate, but that is a valid argument for simply
divesting this decision to market forces. Where this results in gross
differences, as in some executive salaries, we can intervene post-market with taxation and the like.
This is a far cry from the market intervention intrinsic to time banks.
This all reminds me of the time I went to the launch of a
book called ‘A world without money’. I mentioned it to an economist friend of
mine and she said ‘I imagine it would look a lot like a world with money’.
Market mechanisms and their paraphernalia—notably currency—emerged organically
and are the best tool we have for a managing a wide range of issues. They are
not unfair, they are effective. What’s unfair is the accident of birth, and we
can correct for that, through public education and health, for example, without
needing to get rid of the market.
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